XRP is soaring!
Why does XRP cause 'brain short-circuits'?
In the cryptocurrency space, the existence of XRP has disrupted many traditional narratives, especially concerning venture capital (VC) and mainstream views on protocol value.
The initial viewpoint believed that 'venture capital always tends to sell off, so choosing meme coins is a strategy against venture capital.'
However, this viewpoint is gradually being overturned. It turns out that what can truly counter venture capital is not meme coins, but those agreements with stable cash flows, as well as long-term agreements based in the U.S. (often referred to as 'Dino coins').
First, Hyperliquid demonstrates how cash flow-driven startups can achieve success through community distribution. Jeff initially supported this project with his own trading funds, proving that a community-facing distribution model can be established without relying on venture capital support.
Secondly, XRP further indicates that cryptocurrency whales are more concerned about the reliability of agreements, and this reliability is closely related to the longevity of the agreements. The XRP case challenges the core assumptions of venture capital, particularly the following points that are especially unacceptable to them:
No venture capital exposure: XRP has received almost no investment from venture capital, so they cannot profit from it.
Lack of smart contract technology: XRP does not rely on smart contracts, which runs counter to the technological logic behind most venture capital investments.
The contradiction between user numbers and value: XRP has only 20,000 active sending wallets but boasts a market cap of up to $180 billion, which completely contradicts the traditional view that 'the value of an agreement requires a large user base to support it.'
Focus on transaction sending: The core function of XRP is to send transactions, and the efficiency of this single function makes other multifunctional agreements seem inferior.
The 'God Candle' event of XRP/SOL warns of regulatory issues
The 'God Candle' event of XRP/SOL (i.e., a sudden price surge) occurred simultaneously with the live broadcast on Pump.fun revealing human exploitation, human trafficking, and suicide attempts. These events prompted people to reflect: When an agreement has a large user base but lacks a review mechanism, it can lead to extremely negative consequences, including the proliferation of illegal activities and the worsening of social issues. This situation will ultimately attract the attention of regulators or law enforcement.
This leads to another controversial feature of XRP: Trust Lines. Trust Lines require users to actively establish trust relationships before accepting a certain token.
This means that users cannot arbitrarily send 'racist tokens' or other unwanted tokens to any address. Although this design has been criticized as a 'high-friction' user experience (UX), it effectively prevents low-quality usage while meeting the needs of high-quality users (such as banks).
As the market gradually recognizes the issues that could arise from lacking these security guarantees, this mechanism is increasingly being accepted.
Bitcoin (BTC) has almost no application in such scenarios, but its performance still far exceeds that of Ethereum (ETH), even though the latter claims to be able to 'drive Web3.' This is the initial stage of market change, but the live event of SOL has helped people truly understand what 'mass adoption beyond buying' looks like and recognize the importance of compliance.
Another significant change is that since Trump was elected, the radical enforcement regime has essentially ended. This has transformed U.S.-based agreements from facing survival risks to being in a state protected by the 'Navy.' Any attempts to scrutinize Ripple Labs' actions may face strong opposition from the U.S. government.
The greatest risk that XRP once faced was that the U.S. government might accuse its Unique Node List (UNL) of being involved in money transmission and impose OFAC fines while allowing the SEC to sue every validator to force compliance. However, as the regulatory environment changes, these risks are gradually transforming into advantages for XRP.
Protocols with similar risks (such as Cardano and XLM) have also taken more proactive actions as a result. Nowadays, the U.S. regulatory environment has instead viewed them as important tools against censorship.
Additionally, the unique position of the U.S. in the global financial system has also influenced this trend. The U.S. is one of the centers of global anonymous cash because other countries find it difficult to enforce reporting requirements on U.S. financial institutions. Tether can be seen as an on-chain extension of this logic—a cash reserve pool of up to $135 billion that is semi-compliant. As long as these assets are denominated in dollars, the U.S. government does not care about reporting requirements from other countries. This is also the reason behind Tether's closure of operations in Europe.
The U.S. hopes to strengthen the global dominance of the dollar through financial innovations in the cryptocurrency space. As a result, the research and development activities of XRP have shifted from being 'marginalized' to being a part of U.S. government policy.
Although the recent price fluctuations of XRP are attributed by some to retail-driven movements, in reality, especially for long-established coins, the holding is highly concentrated.
Most whales in the network have not sold off at the current price, despite market liquidity fully allowing them to do so. This indicates that they still have confidence in the future of XRP, and this confidence stems from multiple factors mentioned above.
The logic of the market never goes wrong; our task is to understand it as much as possible and learn from it.
This article is collaboratively republished from: Deep Tide
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