$XRP has struggled to gain momentum in the current crypto market cycle, remaining approximately 86% below its all-time high of $3.84, which was recorded on January 4, 2018. Despite fluctuations in the market, XRP is currently trading at levels similar to those seen in October 2022. Crypto analyst CryptoTank recently shared insights on X (formerly Twitter), explaining why XRP's price has remained stagnant. His analysis, which garnered over 214,000 views, has drawn significant attention.
### Understanding XRP’s Price Stagnation
CryptoTank opened his discussion by addressing the growing curiosity around XRP’s price stagnation. “I’m receiving numerous inquiries about XRP and why its price isn’t moving,” he stated. “Let me explain how XRP’s price is determined for those who are new to the space or struggling to understand.”
According to his analysis, XRP’s price is influenced by the value or volume transacted on the XRP Ledger (XRPL) relative to the circulating supply of XRP. However, CryptoTank highlighted that the frequently cited circulating supply of approximately 56 billion XRP is somewhat misleading. “Just because 56 billion is in circulation doesn’t mean all 56 billion is actively used on the ledger,” he clarified. A significant amount of XRP is held in private wallets, controlled by large holders known as “whales,” or stored on exchanges, meaning it does not participate in daily transactions.
“What truly matters for price movement is the portion of the supply that is actively traded on the ledger,” CryptoTank noted. He estimated that only about 20% of the circulating supply—roughly 10 billion XRP—is used daily. This active supply is essential for maintaining liquidity within Automated Market Maker (AMM) pools, which support transactions by pairing XRP with other tokens or currencies such as RLUSD (Ripple USD).
CryptoTank further explained that banks and financial institutions intending to use the XRPL for settlements will likely operate with their own tokens or central bank digital currencies (CBDCs). These entities will pair their assets with RLUSD, relying on the liquidity available in AMM pools. The XRPL’s algorithm identifies the most efficient settlement paths, defaulting to XRP unless a more efficient option is available. “This algorithm uses XRP as the default for settlements and will only choose an alternative if it is more efficient, which is rare,” he explained.
### Evaluating the Potential Transaction Volume on XRPL
To demonstrate the potential scale of transactions on the XRPL, CryptoTank referenced the daily settlement volumes processed by some of the world’s largest financial institutions. SWIFT, the global financial messaging service, handles around $5 trillion in daily transactions. J.P. Morgan Chase, a leading U.S. bank, processes about $10 trillion daily. Bank of America manages approximately $7-8 trillion daily, while Japan’s SBI Holdings settles roughly $2 trillion daily. “These four institutions alone account for around $25 trillion in daily settlements,” he highlighted.
CryptoTank also mentioned that Ripple, the company behind XRP, has over 1,700 non-disclosure agreements (NDAs) with various banks and financial institutions, suggesting a large potential user base for the XRPL. If just 10% of these institutions' settlement volume were to shift to the XRPL, the daily on-ledger transaction volume could reach $2.5 trillion. To ensure efficient and frictionless transactions, CryptoTank argued that the AMM pools would need substantial liquidity. “The pools must have double the $2.5 trillion value to avoid transaction failures and friction,” he asserted, implying that the total value on the ledger would need to reach approximately $5 trillion to facilitate these settlements smoothly.
### Projecting XRP’s Necessary Price
CryptoTank then estimated the price XRP would need to achieve to support this level of daily settlement. “To determine the price necessary to provide deep enough liquidity for seamless settlements between currencies or CBDCs, divide the $5 trillion by the 10 billion XRP in active circulation,” he explained. This calculation results in a required XRP price of $500. “XRP’s price would need to reach $500 to accommodate these daily settlements,” he emphasized.
He clarified that this scenario represents a basic example of XRP’s potential use as institutions begin utilizing it for daily settlements. He acknowledged that additional factors, such as the tokenization of assets, debt, and real estate, could further increase the value on the ledger. “The tokenization of assets, debt, real estate, and other financial instruments will add value to the ledger over time,” he noted.
### Differing Opinions Within the Crypto Community
Not all market observers share CryptoTank’s optimistic outlook. One user, representing chart analysts, responded to his thread, asserting the continued relevance of technical analysis. “Technical analysis is the only thing that matters. Buy coins based on chart patterns, not narratives, for better returns. That’s why most retail investors fail,” the user commented.
In response, CryptoTank defended his perspective, emphasizing the transformative impact of institutional adoption. “You clearly don’t understand how utility tokens work or the imminent global changes in this space,” he countered. “Retail speculation will soon be overshadowed by institutional adoption. Most coins will become obsolete, and the market landscape will change significantly.”
### Conclusion
CryptoTank’s analysis suggests that as institutions adopt XRP for settlements, its utility could drive significant price increases, potentially far beyond current levels. However, skeptics argue that traditional technical analysis remains the most reliable tool for predicting price movements in the crypto market. The debate underscores the evolving and complex nature of the cryptocurrency landscape as it moves towards greater institutional involvement.
