As the eyes of the cryptocurrency community were fixed largely on Bitcoin’s push to overcome its all-time high value and some healthy recoveries in the world of decentralized finance, the value of low-price altcoins suddenly skyrocketed – with Ripple (XRP) gaining 200% compared to the start of November. But why has this happened?
Despite neither Ripple (XRP) or other low-price altcoins seeing any significant events that could spark a surge, the coins are continuing to soar higher.
The past week has seen a seismic 139% rise in XRP – accounting for much of its yearly price movements in one meteoric rally. Today, ripple’s value is at its highest for nearly three years.
According to market data, XRP has been the best performing cryptocurrency over the past few days among the top 100 assets but for Stellar Lumens (XLM), the crypto cousin of XRP.
So, what forces were at play in propelling ripple into the stratosphere? According to some commentators, XRP’s huge move could have been sparked by a movement that began on social media.
TikTok’s Timely Intervention
TikTok is developing something of a reputation for rapidly inflating crypto assets across the board. In the summer, a small cluster of influencers attempted to encourage followers to invest in Dogecoin in a bid to gain a significant windfall on their investments.
It seems that Ripple has become a new target for viral content creators on the social media platform, and fresh content appears to be arriving in high volumes charting the coin’s rise.
Eric Wall, chief investment officer at crypto hedge fund outfit Arcane Assets said that
“TikTok is the world’s most sophisticated tool for creating and for tracking virality.”
Wall’s words indicate that the power of social media may be strong enough to actively manipulate markets. While this could be good news for some investors, it may also undermine the integrity of a cryptocurrency ecosystem that prides itself on decentralization.
Adding fuel to the suggestion that TikTok boosted XRP’s price is the evidence that the number of unique wallets buying ripple rocketed by 24,408 – the highest number on the network since May 1st 2020.
While speculation driving crypto prices is nothing new, today there is a wide range of cryptocurrency exchanges that can support masses of new investors gravitating to a specific coin. This may mean that we could see further artificial price boosts in the near future driven by viral social media posts.
Optimism Driven by Old News?
Not everybody was ready to buy into TikTok being the driving force behind XRP’s unexpected growth, however. Writing for Coin Telegraph, Benjamin Pirus speculated that the significant rise could’ve been down to the emergence of old news concerning the coin.
Before the rapid spike in value, information came to the fore about the inclusion of Bank of America towards Ripple’s payment network, RippleNet, based on a brief from Ripple News. This may have driven fresh widespread confidence in the cryptocurrency, however, it’s since emerged that the Bank of America has been a member of RippleNet since March 2019 at the latest.
While this indicates that there really is a lack of new developments floating around the XRP stratosphere, sometimes all it takes is some speculation for prices to quickly snowball.
Pirus also floats the idea that ripple’s rise could be down to widespread investor interest in altcoins following the profits that have recently been delivered by bitcoin. Popular crypto commentator, Josh Olszewicz forecasted the rise of XRP in the days before the coin’s surge took place, highlighting that it’s likely to be “BTC profit taking rotating into alts” while noting that it’s “probably the most bullish it’s looked in years.”
Buybacks Contributing to Boosts of the Ripple Altcoin
Another factor in the rise of ripple could involve buybacks. During the third quarter of 2020, Ripple bought $45.5 million worth of XRP in a repurchasing program. The idea behind the move was to help support healthy markets.
The sales summary listed on the Q3 report showed total purchases of $45.5 million while in the previous quarters there was no evidence of repurchasing taking place. Subsequently, the report stated:
“As indicated in the Q2 2020 XRP Markets Report, Ripple is purchasing — and may continue to purchase — XRP to support healthy markets.”
In the wider world of investments beyond the realm of crypto, a buyback can cause buyer demand to rise for certain assets – whether they’re stocks, commodities or cryptocurrencies.
Despite $45.5 million not being anywhere near significant enough to heavily affect the value of XRP on its own, it may have caused enough sentiment to create an unlikely gold rush that snowballed.
Ripple may be the third biggest cryptocurrency in terms of market capitalization, but the gulf between the low-price altcoin and the big two of bitcoin and ethereum seems insurmountable.
Or at least it did before the recent unforeseen XRP surge. Now, the coin that’s been described as ‘literal garbage’ is rising exponentially, and where it eventually settles may be hands of social media users.