Over the past week the price of many cryptocurrencies has fallen dramatically. With Ethereum dropping in value by approximately 24%, Ripple (or should I say its token XRP?) has managed to restrict the sell off to just a 3% loss. XRP has therefore once again flipped Ethereum.
The Ethereum price chart isn’t looking too fantastic either. If we see the price dip below a possible $138 support level then there could be further pain. XRP on the other hand (as well as its competitor XLM) looks much more healthy. Both Ethereum and XRP are vastly different projects. Are there any reasons for this price action?
Analysing reasons for sell offs or big pumps is extremely difficult. Markets are affected by numerous events. Whether that be the charts, news or randomness. Ethereum appears to be suffering largely like most other cryptos. However, it can be argued that XRP is not like other cryptocurrencies. The amount of XRP being held by its ‘parent’ company Ripple is extremely high. Therefore, price action can be dependent upon this.
Ethereum has been suffering from a string of bad news recently. The SEC clamp down on Paragon and CarrierEQ has further built pressure upon the platform that pumped through the ICO craze of 2017. Further to this, many companies who did hold ICOs last year can put further downward pressure on the price when they sell. As Ethereum dips lower these companies will end up getting even colder feet. This downward spiral could prove hard to stop.
Ripple executives, on the other hand, claim their coins are in escrow. This is meant to assure the XRP community that there will be no large sell off in the near future. With the amount of XRP that Ripple executives hold they could choose to sell or buy more then they could theoretically be able to affect the prices of their own coin. The issue of whether Ripple has made XRP centralised will be discussed later this week in another article.
One advantage (or disadvantage) for XRP is their community. I doubt I have seen such a devoted and convinced community behind their coin. To their credit this remains despite the vast amount of criticism that is thrown at XRP and Ripple. Ethereum’s community whilst strong, is not as mobilised as XRPs.
XRP’s price behaviour in this climate suggests it is behaving differently to all other cryptocurrencies. This could be precisely because it is unlike other cryptocurrencies. As mentioned before, rather than being part of the crypto anarchist nature of cryptos attempting to destroy banks, XRP wants to improve them.