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Ripple: the price of XRP may increase with the burn
Ripple: the price of XRP may increase with the burn
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Ripple: the price of XRP may increase with the burn

By Marco Cavicchioli - 4 Dec 2020

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A hypothesis is emerging that could lead to an increase in the price of XRP (Ripple)

For now, it is only a possible hypothesis, of which the real probabilities of success are not known, and for which it is not possible to estimate the magnitude of the possible impact on the price.

The hypothesis is that of forcing the Ripple company to burn the over 45 billion of XRP held by it, which for now are blocked.

In fact, there are 100 billion XRP, of which only a little more than 55% are actually in circulation

There are more than 45.3 billion blocked and held by Ripple.

The fact is that every now and then Ripple draws on this reserve, as a limited number of locked XRP are released and put into circulation, and are often sold on the market to finance the company

These continuous sales of XRP on the market could be the cause of the lack of price increase of the cryptocurrency in recent years. 

Ripple, the price of XRP between ups and downs

In fact, after reaching an all-time high of $3.40 on January 7th, 2018, the price fell to $0.7 at the beginning of February, and from then on, except for a few days in April of the same year, it continued to fall, never coming back above $0.7 (it is now about $0.6). 

It is enough to think that in December 2017, before the big bubble that caused the price to rise more than tenfold in a month, the price was about $0.25, which was about as much as it was at the beginning of last month, before the boom that occurred in the second half of November. 

The hypothesis that it could reverse this trend was suggested on Twitter by IKHOR, and confirmed by Ripple’s CTO David Schwartz

In essence, given that the governance of XRP is in the hands of the community (and not Ripple), if the validation nodes decided to burn the currently locked XRP, Ripple could not oppose it. 

In fact, it is possible to make changes to the XRP Ledger (the blockchain of the cryptocurrency), provided that they are approved by 80% of the validators, and activated above this threshold for at least two weeks. 

Already in June, an amendment was approved in this way, which did not have the support of the company, so it is an absolutely possible initiative. 

However, to date there is not enough information to establish how likely it is that such an amendment will be approved. 

There would certainly be no lack of consensus, but it is difficult to say whether it could reach 80%, and remain there for at least two weeks. 

Another difficult thing to establish is the impact on the price of XRP.

To tell the truth, ever since the news spread that Ripple started buying XRP for a healthier market, the price of the cryptocurrency has actually gone up, and this is hardly a coincidence. 

In fact, it was from June 2018 that the price of XRP did not manage to rise above $0.6 anymore, therefore the current quotations, following the boom of the second half of November, appear at least anomalous if compared with those of the past two years. 

To this point, it would be more than legitimate to expect new price increases if the community of XRP succeeded in imposing the destruction of the 45,3 billion tokens still locked, but it is extremely difficult to estimate these price movements.

 

Marco Cavicchioli
Marco Cavicchioli

Class 1975, Marco teaches web-technologies and is an online writer specializing in cryptocurrencies. He founded ilBitcoin.news, and his YouTube channel has more than 25 thousand subscribers.

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