XRP’s main use case is serving as a bridge currency for cross-border remittances through Ripple’s ODL. XRP has facilitated fast and secure transactions for large companies like MoneyGram, putting crypto on the map. Owing to this, one analyst believes XRP has true utility and is unfortunately unfairly priced due to its correlation to the OG cryptocurrency, bitcoin. Regarding bitcoin, the analyst opined that it risks collapsing due to the lack of true utility.
XRP’s Correlation With Bitcoin Makes It Undervalued
Crypto analyst going by the online alias Magic is convinced that XRP – which bolsters the On-Demand Liquidity product that facilitates international payments – is hugely undervalued. Ripple, with Brad Garlinghouse at its helm, is now a 10 billion-dollar company.
Most recently, the company promised to drastically reduce its quarterly sales after serious concerns were raised regarding these sales suppressing the price of XRP. This was seen as a huge step in the right direction by XRP investors who had long been vexed about the token’s dismal performance.
However, just like most altcoins, XRP’s movement is largely dictated by bitcoin. Magic explained in a tweet that this correlation with bitcoin, an “asset that has no real utility”, drags down the price of XRP.
Sans Real Utility, Bitcoin (BTC) Is Bound To Tumble
It is fair to say that bitcoin birthed the $196 billion dollar crypto industry. However, according to Magic, the top crypto lacks any real utility. He does not stop there. He then says that the 2017 crypto euphoria when bitcoin skyrocketed to $20,000 was driven by sheer speculation and the asset needs to find a real utility to avoid collapsing.
Magic observed that lack of utility can set off a domino effect of other negative reactions like the fall in demand and without demand, bitcoin’s fair value could subsequently be lower.
Not all Twitter users agree with Magic. One user noted that bitcoin cannot be categorized as a utility coin like XRP but is a successful store of value that helps investors hedge against irresponsible dovish policies, quantitative easing, and the likes.
Meanwhile, XRP Hasn’t Fared So Well
In 2019, Ripple bagged countless partnerships with banks and payments companies in a bid to expand XRP’s use case. This extensive adoption, however, only paints half the picture. Over the same period, XRP was one of the worst-performing assets with over 40 percent losses on a yearly basis. XRP is also down from its Jan 2018 all-time high by nearly 95 percent. In 2018, XRP’s market capitalization climbed to as high as $120 billion. Now it is hovering around $8.41 billion.
Nonetheless, in this new year, there is reason to believe that Ripple’s XRP could recover and finally reward its dedicated holders. Meanwhile, Ripple continues to be in the sought-after position of being a global leader in international remittances.