Ripple price prediction (XRP)

Since this page seems to be one of the more popular pages, I’m going to update it regularly as I learn new information and change my ripple price expectations.

Jed McCaleb confirms ripple sale

6/8/14: Ripple co-founder Jed McCaleb has come public to confirm that he’s begun selling his nearly 9 billion XRP. “I have started to sell,” McCaleb wrote on Saturday. “I announced I was going to start to sell so that I could do so with the community’s knowledge and not behind the community’s back.” Since McCaleb’s sale began late this week, I’ve been following one of his confirmed ripple accounts. On June 6, the account held more than 27 million XRP worth more than $100,000. As of this writing two days later, the account holds 19.1 million XRP and $40,000 (USD). McCaleb’s been selling slowly to maximize the value he’s getting rather than forcing the price of XRP down quickly. Still, that should force the price of XRP down substantially over time without a large influx of buyers. Check out my post Ripple co-founder Jed McCaleb has begun ripple firesale for more.

The effects of Jed McCaleb’s ripple sale

6/6/14: As promised, Jed has begun selling his XRP. If my sources are correct, you can view transactions from a confirmed McCaleb ripple account here. The account currently holds more than 27 million XRP worth north of $100,000 at today’s ripple prices. Interestingly, selling from that particular account has been relatively light. Over the past day or so, Jed’s been selling his XRP for approximately $0.00389. That signals that his intention is to sell slowly to maximize the value he’s getting rather than forcing the price of XRP down quickly. Still, I don’t think it’s safe to assume that XRP prices are going to hover around $0.0038. We’re going to need more buyers moving into the space to suck up all the excess supply from McCaleb. If that doesn’t happen, look for Jed to simply lower his asking price over time. That’s what I anticipate, and I suspect ripple prices will trundle lower in the coming weeks. Some of it does rely on McCaleb’s patience, though. If he’s not in a hurry to make money off his XRP, he could just keep his ask rate where it is, effectively putting a ceiling on XRP prices for a year or more. Either way, I’m not a buyer of XRP just yet.

Should I sell my XRP?

5/27/14: Yesterday, a reader wrote me to ask if I truly believe Jed McCaleb will sell his XRP. If so, does that mean everyone else should sell their XRP, too? My full answer is here: Should I sell my XRP? To summarize, I wrote that I believe McCaleb will, beyond a doubt, sell his XRP (especially since he’s already talking about giving pre-announcement XRP-holders a bonus stake in his new project). Secondly, I believe Ripple prices will fall, and they’ll fall rapidly. Without new buyers, we should see Ripple prices fall by more than 50 percent once Jed begins selling on June 4. I can’t say whether or not that means you should sell your ripple, but I did sell half of my stake. I’ll buy back if prices fall far enough. Just ask yourself whether or not you believe the recent news would encourage a deep-pocketed investor to start buying XRP right now. If the answer’s no, you have to believe ripple prices will fall. There’s simply no way the price of XRP can remain stable in the face of McCaleb’s selling without serious money moving in (or Ripple Labs itself buying up McCaleb’s stake).

Chris Larsen to give away his XRP allotment to ‘underbanked and financially underserved’

5/27/14: The fat lady could be singing in the Ripple saga. Here’s what we know so far: Jed McCaleb and Kraken’s Jesse Powell have left Ripple’s board. Ripple Labs looks like it’s planning to sue Powell (if not McCaleb, too, though I haven’t seen anything online to that effect), and Ripple has announced that CEO Chris Larsen plans to “distribute his donation of 7 billion XRP to the underbanked and financially underserved.”

“This plan has previously been in development but is now being accelerated and finalized independent of a formal agreement amongst all the original founders,” writes Ripple’s Monica Long. “He believes this is both the right thing to do and the best way to remove further distractions in pursuit of the broader vision of the company. Details of the foundation, its independent directors, and the giveaway will be forthcoming.”

Curiously, this news seems to have led to a rebound in Ripple prices. To me, it’s a sign that more than just Jed’s ripple could be hitting the market soon. That could put even more downward pressure on the price of XRP.

Ripple Labs intends to sue Powell?

5/25/14: Apparently, Ripple Labs didn’t like the language co-founder, Jesse Powell, used when he announced his resignation on Reddit yesterday. Specifically, they took issue with this statement (among other things): “Prior to Jed’s departure from Ripple, I had asked the founders to return their XRP to the company. Jed agreed but Chris (Larsen) declined — leaving a stalemate.” After that post, Powell alleges that Ripple Labs sent him a threatening letter in a Reddit post titled “Ripple Attack Dogs Descend on Resigned Board Member.” Powell posted his response to Ripple’s corporate counsel here in a Google Doc. The saga continues! I can’t wait for it to play itself out, so we can get back to focusing on developing Ripple, growing the community and stabilizing the price of XRP. Check out my post for more: Ripple Labs to sue Kraken CEO?

Ka-Powell! Ripple board member resigns

5/24/14: It’s been a rough few days for Ripple Labs. First, one co-founder (Jed McCaleb) announced he was selling his nearly 9-billion-XRP stake (see “The McCaleb Crash” below). Now, another co-founder, Jesse Powell, has announced he’s resigning from Ripple’s board. Check out my full post here: Ripple soap opera continues with board member’s resignation. So far, XRP prices seem relatively unperturbed by the news. The real fireworks will start on June 4, 2014 when McCaleb starts selling XRP. The only thing that can possibly stop a huge decline in the price of XRP is if Ripple Labs or another major investor steps in to buy up McCaleb’s coin.

The McCaleb Crash

5/22/14: I just opined for 1,300+ words on today’s Jeb McCaleb-inspired ripple crash. After Jed posted on XRPTalk that he plans to sell off his stake of 9 billion XRP, the ripple market understandably tanked. We’re already down 50 percent, and I suspect we could fall as much as 90 percent or more. That means my near-term target for ripple on the downside is around $0.0006. Read more here: Analyzing Jed McCaleb’s departure and the ripple currency plunge (XRP). Ultimately, though, I plan to buy more XRP when it bottoms (unless of course, Jed’s secret bitcoin project looks more promising when its unveiled).

Ripple on the verge of getting added to Cryptsy?

5/19/14: Ripple’s got a big lead on the list of currencies Cryptsy is considering adding to its online cryptocurrency exchange. That would be a huge win for XRP as Cryptsy is the deepest altcoin exchange in the world right now. It would add some much-needed volume to the XRP market. It’d also give the Cryptsy staff a whole lot of exposure to the Ripple protocol. Who knows, maybe they’d decide to run their entire exchange on Ripple? One can only hope

If Ripple does get added to Cryptsy, look for an upswing in the price of XRP.

Ripple price outperforming peers

5/19/14: Ripple’s had a string of good news over the past few days. First, Ripple Labs announced that Germany’s Fidor bank is adopting the ripple protocol. Then, a few days later, we learned that Mexico-based digital currency exchange Bitso launched a Ripple gateway for the peso to allow remittance capabilities to its customers. The news spurred a big upswing in the price of XRP since the currency’s low on April 28. Indeed, the price of XRP is up about 26 percent then:

I’m really curious to see if Ripple can move into a long-term uptrend now that there’s some actual real-world momentum behind the protocol.

Over the past 30 days, Ripple’s actually down 6.3 percent. That compares favorably, though, to bitcoin, which is down 11.8 percent in the same timeframe, and litecoin, which is down 19.5 percent.

Ripple and Fidor just changed cryptocurrency forever

5/7/14: I just posted an article on Fidor’s adoption of ripple (Ripple and Fidor just changed cryptocurrency forever), and I’m eager to find out some more details on exactly how Fidor’s using the protocol. Hopefully, I can score an interview with someone from Fidor or Ripple Labs soon. In the meantime, here are my thoughts on how the move will affect the price of ripple:

1) We’ve probably put in a low on the price of XRP. Since the announcement of the ripple-Fidor marriage, the price of XRP has shot up 30 percent in two days. For the first time in months, the price of XRP has meaningfully diverged from the price of bitcoin (with BTC up just 2 percent over the past two days).

I must add the caveat that if Fidor experiences problems with its ripple integration or drops the protocol altogether, it could doom the price of XRP for good. So, we’re at an inflection point: either the ripple protocol has begun to prove itself a technological innovation that will destroy the ACH system, or it will fail, get dropped by Fidor and begins its slow descent into obscurity.

I expect ripple to prove itself useful to the international financial system. That means Fidor’s probably the first of many banks that will adopt the protocol, and the price of XRP should rise from here.

2) Fidor’s integration proved something that I’ve been thinking and writing about recently: ripple’s more of a backbone product than a cryptocurrency. Fidor doesn’t expose customers to XRP or provide a mechanism for customers to acquire XRP. Instead, the bank’s using its own XRP to shuttle Euros around behind the scenes.

That means we could have a future where the ripple protocol is widespread and yet members of the general public may not even know what an XRP is.

Obviously, it’d be a win for the cryptocurrency community if XRP-to-XRP transactions became commonplace (and I still think they could). If that happens, though, it’s going to take a lot longer than it will for banks to transparently adopt the protocol.

Still, that fact has little bearing on my bullishness for XRP as the currency is still finite, partially destroyed with every transaction and a requirement to use the ripple protocol. That means that as the more transactions happen on the protocol, the demand for ripple will increase, and the price will rise. Should the price of XRP rise, I expect ripple to lower reserve requirements as has happened in the past. What will be really interesting to follow is ripple’s transaction volume in the wake of Fidor’s protocol adoption. How many transactions will Fidor add to the network? What effect will that have on the price of XRP? Volume on the ripple network has spiked by 600 percent over the past three days and stands at $460,175.60 over the past 24 hours. I’ll keep an eye on it (particularly after the news dies down). I’d also like to see the number of ripple accounts begin to climb faster. As of right now, we’re at 79,997 accounts.

Five things that could catapult the value of Ripple higher

4/18/14: Ripple’s prices have been in a free-fall since the beginning of the year. Back in January, one XRP was worth $0.026. Today, an XRP will get you $0.0062. That’s a decrease of 76 percent! That’s not the sort of return investors like to see.

In order to see the price of ripple surge higher, we need to see one or more of the following:

1) Ripple signs up a major bank as a gateway. Ripple Labs CEO Chris Larsen named that one of his top priorities in 2014. He’s got seven months to go. If Chase or Bank of America signed on, I imagine ripple prices would ignite.

2) Ripple gets added to Cryptsy and other prominent exchanges. Currency traders have to work hard to get XRP, and that means most of them don’t bother. If users could go through an established exchange like Cryptsy, we’d likely see a lot more investment in XRP.

3) A major retailer announces it’s accepting XRP for transactions. Ripple needs its own Overstock.com (the first major retailer to accept BTC for transactions).

4) Ripple Buy it Now buttons become commonplace. With payment processors like Coinbase and Bitpay, it’s simple to set up Bitcoin Buy It Now buttons. If Ripple had a similar mechanism, at least a handful of vendors would likely implement them. The great part is, it’d be easier to implement than bitcoin buttons since users and merchants wouldn’t need to wait on numerous confirmations.

5) A Ripple investment fund gets created. Much like the Bitcoin Investment Trust, a simple way for deep-pocketed institutional investors to invest in Ripple would likely drive up the price quickly.

Ripple price vs. bitcoin price over the past 14 months

Out of curiosity, I wanted to see which currency has performed better over a relatively long timespan. I was able to track down ripple data back to February of 2013, so I started there. Since that time, ripple has yielded a 434 percent return. Bitcoin has yielded 1508 percent. That means a $10,000 investment in bitcoin would now be worth $161,000. A $10,000 investment in ripple would be worth $53,426.

As you can see from the chart, ripple is like bitcoin’s more volatile cousin. That makes me think of silver’s relationship with gold. When times are good, times are really good for ripple (and silver). Likewise, when there’s a sell-off, ripple gets hammered.

Right now, the price of ripple is intimately tied to the price of bitcoin. I look forward to a day when the two trade more independently as they are very different investment vehicles.

Where will demand for XRP come from?

4/18/14: Since the supply of Ripple is fixed (with very minimal deflation), there’s only one thing and one thing alone that will drive the price of Ripple. That’s demand. At the moment, demand comes from a very small number of speculators who believe the value of XRP will increase in the future. Those speculators have dumped about $50 million into XRP.

For a long time I thought that the primary driver for Ripple demand would be XRP-to-XRP transactions. Specifically, I had assumed users would convert dollars, yuan, bitcoin, whatever, into XRP, then they’d use XRP as a currency to make online- and real-world transactions. Why? Because it’s faster and easier than using bitcoin or other cryptocurrencies. Without the need for blocks and artificial algorithms, ripple transactions are nearly instantaneous.

A recent interview with Ripple Labs’ CEO Chris Larson, made me realize that the company isn’t pushing XRP-to-XRP transactions. “Ripple is ‘not really consumer stuff,’” Larsen told CNN, “and will ultimately be a backbone system accessed primarily through existing institutions.”

If the core developers of Ripple are pushing for the currency to be a backbone mechanism, it’s likely that’s what XRP will become. In that case, demand for XRP will be driven by the number of transactions that take place on the Ripple network. The more transactions that occur, the more XRP will be needed, and the higher the price of XRP will climb.

This isn’t to say that XRP-to-XRP transactions won’t be commonplace, but we know now that Larsen isn’t pushing that as a major benefit of the network. As he’s stated elsewhere, his predominant goal for 2014 is to get a “major bank” onto the ripple protocol. If that happens, expect ripple prices to surge.

In the best-case scenario for Ripple, let’s say every bank account in America had XRP associated with it. There are roughly 240 million Americans over the age of 18 in the U.S. If 75 percent of them have bank accounts, we’re at 180 million accounts in the U.S. If each account has 25 XRP in it, we’re looking at 4.5 billion XRP or 4.5 percent of the total outstanding supply. That doesn’t sound like much, but remember that ripple is a global protocol, and the U.S. population of roughly 320 million only represents 26 percent of the developed world and 4.5 percent of the global population.

CoinMarketCap.com finally updates XRP’s market cap

4/11/14: For months, Coinmarketcap.com calculated the total market value (i.e. market capitalization) of XRP by multiplying the current market price by 100 billion (the total number of XRP that will eventually be available to the public). However, since Ripple Labs controls the vast majority of the XRP that’s been created, you can’t say that there are 100 billion XRP floating around the web. In fact, the closest estimate we have the number of dispersed XRP is Ripple Labs’ XRP Distribution page, which currently says 7,579,478,083 XRP have been given away. That’s the new number CoinMarketCap is using to calculate Ripple’s total market cap. That figure’s much more accurate. The change pushed Ripple down a few slots on CoinMarketCap’s list of the top cryptocurrency’s by market cap. Where it used to occupy the No. 2 slot, it’s now the four-largest coin behind bitcoin, litecoin and peercoin (in that order).

All that said, Ripple Labs hasn’t been updated its distribution page since Feb. 24, 2014. I’ll keep an eye on it to see if they plan to accelerate their giveaway.

Keep in mind that the more/faster Ripple Labs gives away XRP, the greater the downward pressure on XRP’s price will be. Every time Ripple Labs gives away XRP, they’re flooding the market with supply. New demand must enter the market to suck up that supply or the price of XRP will fall (sometimes rather dramatically).

The death of Ripple’s Computing for Good program

Update 3/31/14: In an odd twist of timing, the last entry I made on this post was on March 28, 2014 (see below). There I talked about the primary way XRP enters the global economy: via Ripple Labs’ Computing for Good program. A few hours after I added my note, I got an email from World Community Grid (and Ripple Labs) saying they were indefinitely putting the program on hold!

“We made this decision for two main reasons:

• To re-focus our strategy for XRP distribution
• The Computing for Good giveaway system is in desperate need of a fundamental re-architecting

Right now, the most pressing need for the Ripple ecosystem is on-boarding more gateways. In service to attracting more gateways, we will focus engineering resources on user giveaways that help gateways attract new customers.”

First, I applaud Ripple Labs’ efforts to attract new customers. While the Computing for Good program was accomplishing great things for the world, it was doing very little to expand ripple’s universe. If we want to see widespread adoption of ripple, the world needs actual reasons to use ripple and that starts with active and trustworthy ripple gateways.

Second, I’m surprised to see Ripple’s value continue to fall rapidly. In effect, Ripple Labs is temporarily turning off its spigot of “free” XRP. Where they were previously injecting 1.25 million XRP into the world everyday, they’re slowly tapering that off to 0, and they’ll instead find new developer-centric ways to give away XRP. I would have thought this would immediately be bullish for the price of ripple (and perhaps it is). However, the broader market for digital currencies is in a downtrend. Bitcoin, litecoin and just about every other altcoin out there have been in decline over the past few weeks due to turmoil in China’s bitcoin markets. Once the dust settles, perhaps the end of the Computing for Good program will prove bullish for ripple prices in the near-term. I know I plan to buy more ripple if and when prices hit a bottom.

How XRP enters the economy

Update 3/28/14: The main way XRP enters the global economy is via Ripple’s “Computing for Good” program. Users can sign up to donate usage of their computer to research labs around the world when they’re not using it. In exchange for donating some of your computer’s processing power, Ripple will donate XRP to your Ripple Wallet. Every day, in fact, Ripple Labs gives away 1.25 million XRP. At current market prices, that’s worth $13,750.

Let’s assume that when Ripple pays out that XRP every day, the recipients put in a sell order to exchange their XRP for dollars. That means Ripple needs an inflow of $13,750 investment dollars every single day to keep the value of XRP from deflating. That’s $412k a month or just shy of $5 million a year!

The craziest part about that is 1.25 million XRP sounds like a lot to be giving out every day. But as someone tweeted recently, it’s not when you think about the total number of Ripples in the world:

Giving away 1.25 million #ripple a day sounds huge until you consider it’d take 219 years to give away 100 billion!

— F-Marion (@Crypt-La) February 20, 2014

Ripple’s market cap is overstated

NOTE: As I write above, this issue has been corrected on CoinMarketCap.com.

Update 2/22/14: Ripple’s market cap is overstated in many places. For example, when calculating the market cap of ripple, you can’t multiply the market price by 100 billion because not all of ripple in the world are actually on the market. In fact, there are only about 7.4 billion ripple on the market with Ripple Labs giving away an additional 1.25 million ripple every day.

If we take the current market price for ripple ($0.016) and multiply it by the actual supply (7.4 billion), we’d see ripple’s market cap is actually around $118 million. That would make it about a third the size of the $389 million litecoin market.

What’s interesting about this, though, is the fact that a sudden influx of cash into the ripple market could spike prices much higher than it might otherwise (if the full circulation of ripple were already in the wild). For example, CoinMarketCap.com estimates ripple’s market cap at $2 billion – a number I’ve already shown is over-stated. If indeed ripple’s market cap hit $2 billion and there were only 7.4 billion ripple on the market, we’d be looking at ripple prices around $0.27.

If ripple’s market cap surged to $10 billion (a number bitcoin hit back in December), we’d be looking at ripple prices of $1.35. A market cap around $15 billion would push ripple up to $2. Not bad!

Ripple will ‘reach parity with the Chinese yuan and maybe eventually the U.S. dollar

Update 2/19/14: Last month, I had the opportunity to interview Robert Reyes, the founder of NoFiatCoin. When I asked him where he thought Ripple was heading, he had this to say: “I don’t think that it’s ever going to be worth $1000, but I really believe it’s going to reach parity with the Chinese yuan and maybe eventually the U.S. dollar.” Read more of his insights in my post: ‘Eventually mining is going to be dead’ and Ripple will rule says NoFiatCoin (XNF) founder.

On another note, here are some quick calculations. At the moment, Ripple Labs is giving away 1.25 million XRP per day to people who are donating computing time to scientific research (via the World Community Grid). With ripple currently priced at $0.015, that means at least $18,750 needs to flow into ripple every day for the price to stay flat.

Another thing to think about: giving away 1.25 million ripple per day sounds like a lot; until you consider the fact that it’d take 219 years+ to give away 100 billion at that rate!

Ripple Labs’ release schedule dictates prices

Update 2/19/14: From an email I typed up last night: Ripple future value is hard to predict because there is no set release schedule for the coins and there are an absolutely huge number of them (100 billion). If all the ripple were released to the public right now, I’d say $1 in a year would be impossible. Considering the fact that all the ripple won’t be released, a dollar could be possible. I’m tempering that expectation, though and hoping we hit $0.25 by the end of the year… Ripple needs to announce some partnerships/start making some splashes soon if it wants to fend off all the bitcoin protocols that are popping up.

My personal ripple price predictions

Original Post 1/18/14:

Let me start by saying I’m a huge fan of Ripple (XRP). In an increasingly globalized world, it gives users the ability to complete a transaction no matter what currency they like. For example, when I buy ripple on the network’s exchange platform, I place an order in U.S. dollars. The sellers who ultimately give me my XRP might want Chinese yuan or even bitcoin in exchange for their ripple. Ripple handles those currency conversions instantly, and it does it behind the scenes. If I buy 100 ripple, 90 of them might come from someone selling them for bitcoin and 10 might come from someone selling them for yuan, for example. Market makers in the middle take a cut, but it’s all seamless to me as a buyer. Talk about beauty and efficiency!

I could wax on longer about why I like ripple, but you may as well check out my post Five reasons Ripple (XRP) could revolutionize financial transactions to get the basics.

Now, let’s take a look at where I see ripple’s value heading in the months and years to come. One of the only ways we have to value ripple at the moment is by comparing it with bitcoin, and there are two major differences between bitcoin and ripple:

1) Bitcoin is a lot rarer than ripple. There will only ever be 21 million bitcoin in the world. As I write this, there are approximately 12 million bitcoin that have been created. Ripple makes that number look absolutely insignificant. There are 100 billion ripple in existence. While that number won’t grow, keep in mind it means there are almost 5,000 times as many ripple in the world as there will be bitcoin! That means ripple will never, ever – ever! – approach the value of bitcoin unless bitcoin collapses and the world finds that it loves transacting in ripple instead. Even then, all the collective ripples in the world would have to be worth $80 trillion to match bitcoin’s current price around $800.

2) Ripple has two purposes. The first is as a currency. The second is as a “network helper” which prevents fraud and allows ripple’s currency exchange platform to operate. In my mind, ripple’s dual purpose gives it more intrinsic value than bitcoin.

Today, one bitcoin is worth $805, and one ripple is worth $0.023. That puts ripple around 1/35,000th the value of a bitcoin. Since bitcoin price predictions are a lot more common than ripple price predictions, let’s use the 1/35,000th number to project future ripple prices.

The bitcoin price prediction that’s most common in the media is the Winklevoss’s prediction on CNBC last November when they said they could see bitcoin hitting a market cap of $400 billion. With 12 million bitcoin floating about, that would put each coin at $33,000. If bitcoin hit that number and ripple were still worth 1/35,000th of that amount, we’d be looking at each ripple being worth $0.94.

Of course, a $33,000 bitcoin sounds like a lot, but even more people have predicted we could see bitcoin prices north of $100,000. If that happens, ripple could theoretically be worth $2.85.

In the near-term, I’m targeting bitcoin prices of $10,000, which would put ripple at $0.29 each. Of course, all this assumes that ripple will maintain it’s standing at about 1/5th of bitcoin’s market cap ($2 billion for ripple and $10 billion for bitcoin at current prices). I think those numbers could smooth out as the ripple network expands and actually starts getting used. If that happens, look for ripple to work its way even higher. With that in mind, I’ll set a personal near-term price target of $0.35 for ripple. In the long run, I wouldn’t be surprised to see it hit $1 per XRP – particularly if vendors start accepting the currency in 2014 and the years to come. That’s speculative, of course, but I’m putting my money where my mouth is and slowly investing in ripple as I can. 2014 should be a make-or-break year for the protocol, and it’ll be fun to watch how it unfolds.

If you want a really bullish prediction on ripple, you’d have to argue that ripple will become the world’s reserve currency. Right now, the top 100 governments around the world (excluding the U.S.) hold about $7.8 trillion in reserve. If they traded those dollars for the 100 billion outstanding ripple, we’d be looking at a ripple price of $78 each (excluding investment demand). How likely is ripple to become the world’s reserve currency? Check out my post Could Ripple (XRP) serve as the world’s next reserve currency?

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