After a few days of choppy seas, one would expect Ripple prices to gather support from long-term bulls—but that didn’t happen on Wednesday morning. In fact, XRP prices continued their downward spiral, losing more than 16% in a single day.
The XRP to USD exchange rate now sits at around $1.90.
Although it’s the first time Ripple prices dipped under $2.00 this year, investors who bought at the start of December 2017 can still make an enormous net profit.
I understand that’s not much comfort to investors who entered at the apex of the market, but it puts the current fall in perspective. Namely, that XRP was trading at $0.25 less than two months ago.
For those who worry this slump is “proof” of an XRP bubble, I ask this: What started the downward spiral?
A) Rising transaction costs
B) Cybersecurity risks
C) Insider selling
D) A change in pricing methods
The answer: D) A change in pricing methods.
That’s right, dear reader, nothing has changed about Ripple’s fundamental strength. All that happened was CoinMarketCap (a popular web site listing crypto prices) excluded South Korean exchanges from its pricing method.
Ripple Price Chart
This caused a sudden drop in prices because Korean bids had been inflating average prices for months. And Ripple experienced the greatest effects because Korean exchanges contribute an outsize portion of its trading volumes.
So what, Gaurav? If XRP prices were artificially high, then the drop is justified.
Not so fast. I’ll grant that Korean traders were freakishly bullish, but even without outliers, the average XRP bid was above $2.50. Shouldn’t the price have settled around that level? It did not, however, and that is telling.
Analyst Take
The investor reaction to CoinMarketCap’s pricing shift is disproportional at best and downright silly at worst. It’s clear that too many weak hands were holding the asset. Those fickle investors will flock back in when the tide turns in XRP’s favor.
As for my personal view, I consider it is illogical to change a position when none of the relevant facts are changed. XRP is still the most promising crypto on the market. And as such, we maintain our Ripple price prediction of $10.00 in 2018.
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