Will a bullish rally for XRP return or not? There are conflicting opinions

The future of XRP price remains uncertain. While some see bullish signs, there is also the possibility that the cryptocurrency issued by the Ripple company continues to stagnate.

As can be seen in the TradingView chart below, XRP has yet to surpass its all-time high reached in January 2018, almost 7 years ago!

XRP’s path in the market has been bumpy in recent months. After reaching some peaks in previous cycles, the price has remained relatively stable, leaving investors waiting for a new bullish rally in suspense.

One of the points that have come into debate has been the amount of XRP in circulation and its impact on market liquidity.

The market analyst known on social media as CryptoTank shared a intriguing vision in X about why XRP price has seen no notable movements.

According to their analysis, although it is mentioned that there are around 56 billion XRP in circulation, this number may be “misleading.” A considerable portion of these assets is held by whales or stored in private wallets, reducing the number of tokens available for active transactions.

CryptoTank estimates that only 20% of XRP, or about 10 billion, are active on an average day, which determines market liquidity. This amount of active XRP is crucial to avoid large fluctuations in pricesince, with low liquidity, even small buy or sell orders could generate sudden movements in the value of the cryptocurrency.

XRP has the potential to reach significantly higher value if adopted on a large scale by financial institutions, he notes. In this sense, it compares the daily settlement volumes of financial giants such as SWIFT, JP Morgan, Bank of America and SBI Holdings with the potential of the Ripple network.

Based on that, he estimates that if just 10% of the settlement volume of these institutions were moved to the Ripple network, around $2.5 trillion a day in transactions would be needed. To ensure frictionless transactions, it is estimated that AMM liquidity pools should have twice the value of daily transactions, i.e. around $5 trillion.

Dividing the total value needed in AMM funds ($5 trillion) by the total amount of XRP in circulation ($10 billion), you get a price target of $500 for XRPsays the analyst.

The analysis suggests that if XRP is massively adopted by financial institutions for their daily operations, its price could see a significant increase to support the required transaction volumes.

However, if the circulation of XRP is multiplied by the $500 indicated by the analyst, It results that the market capitalization of XRP would reach 28 billion (trillionsin English) of dollars. Coming to surpass assets such as gold or bitcoin itself.

It is hardly credible that a cryptocurrency whose usefulness is unclear and that has been bearish for years will be more valuable than the precious metal, the main safe haven asset or bitcoin, which also fulfills that function. The truth is that Cryptocurrency is not used much as a reserve of value, nor as a means of payment..

Market capitalization is the key factor in understanding whether those numbers are realistic or not. This gives an idea of ​​the relative size of an asset. It’s a quick way to see how big or small a project is compared to others.

«When someone predicts that a cryptocurrency is going to multiply its value by 100 or 1,000, the first step should be to check whether the market capitalization would allow such an increase. Otherwise, it is pure fantasy,” indicates an article published in CriptoNoticias.

XRP has also failed to establish itself as a widely accepted payment optiontaking into account that this is one of the premises of cryptocurrency: its usefulness in cross-border payments. Competition from other cryptocurrencies, especially stablecoins such as Tether (USDT) and USDC, limit their adoption and use for payments.

Whales and their recent accumulation

Meanwhile, XRP whales have remained active. According to data provided by analyst Ali Martinez, large investors accumulated more than $40 million worth of XRP in just a few days over the past week, as can be seen in the chart below.

These acquisitions are usually a sign of optimism in the market, reinforcing the expectation that XRP could experience an uptrend in the short term.

The optimism not only comes from the movements of the whales, but also from Ripple’s initiatives in the institutional market.

The race for the XRP ETF

On the other hand, a possible bullish catalyst for XRP comes from two companies are competing to obtain approval from the US Securities and Exchange Commission (SEC) to launch an ETF based on XRP.

Canary Capital and Bitwise have filed applications to offer investors regulated access to cryptocurrency without the risks of acquiring it directly, as reported by CriptoNoticias.

If these ETFs are approved, XRP could benefit from increased demand, which could boost the price of the cryptocurrency as fund managers buy large quantities. But the company’s historical disagreement with the US regulator does not predict that these proposals will succeed.

Although the possibility of an XRP ETF raises expectations, it is crucial to remember that the creation of these funds does not guarantee an automatic increase in the price of the cryptocurrency.

The case of Ethereum ETFs, the second largest cryptocurrency, serves as an example that these financial products do not always have the expected impact on the market. Even firms like NYDIG have called the performance of these ETFs ‘disappointing’.

The legal battle with the SEC

However, Ripple continues to face a major obstacle: its legal dispute with the SEC, which has also become a thorn in the side for the XRP cryptocurrency.

In early October, the SEC filed an appeal against the ruling of federal judge Analisa Torres, who ruled that Ripple’s sales of XRP on exchanges did not violate securities laws.

Ripple has responded with a counterclaim, arguing that there cannot be an “investment contract” without clear contractual obligations.

This confrontation has kept the market in uncertainty, causing a drop of more than 10% in the price of XRP, which is currently It is between 0.50 and 0.54 dollars per unit.

However, this price range has served as support on multiple occasions this year, and is seen by many as a key psychological zone.

Ripple continues to expand

Despite legal challenges and weak cryptocurrency activity in the market, Ripple has not stopped its expansion. The company launched new custody services of cryptocurrencies to help banks and fintech companies store digital assets.

This new approach to Ripple Custody has registered a growth of 250% year-on-yearhighlighting interest in digital asset custody as an emerging trend.

With clients such as HSBC and Société Générale, Ripple is consolidating its presence in more than 20 countries. This growth could be a key factor in the future of XRPif the company manages to integrate its cryptocurrency into the global financial system.

XRP’s fate is far from sealed. While XRP has the potential for a bullish rally driven by institutional adoption and the development of new financial products, legal issues and low liquidity could continue to slow its growth. The future will tell whether XRP will be able to overcome these challenges and regain its shine in the market.