Ripple (XRP) rose to meteoric heights in December 2017, reaching what some are calling ‘Big Mac’ parity, only to pull back over 80% in January. The market cap now stands US$105.6 billion, with US$2.65 billion in trading volume over the last 24 hours.
XRP the token is a separate entity from other companies with the same namesake, including the banking network RippleNet (originally Ripple Labs), the social network Ripple Works, the advertising company Ripple Media, and the plant-based milk company Ripple Foods.
While XRP aims to disrupt the remittance and cross-border payment industry generally, the main goal of RippleNet is to take on SWIFT, a telecom cooperative created over 40 years ago that is currently used to send secure financial messages between banks. These messages exclude clearing or settlement.
Ripple recently celebrated its fifth birthday, having been created in 2012, and now claims over 100 financial and banking partnerships around the world, most recently with the Saudi Arabian Monetary Authority. However, a Bloomberg article on January 25th suggested banks “have no interest in using XRP.”
The network has an existing supply of ~100 billion, 55 billion of which was placed in escrow in December 2017. By securing the lion’s share of XRP in escrow, anyone can now mathematically verify the maximum supply that can enter the market, and eliminates any concern that Ripple could flood the market. Taking this into account, the circulating supply stands around ~US$46.48 billion.
According to recent Bitmex research, 7 billion XRP was held by Ripple as of January 31st, 39 billion XRP has been distributed, and 55 billion XRP remains in escrow. Distribution and internal holdings have fluctuated over time with supply estimates based on available data from 2013-2015 unable to reconcile “how many XRP were sold, at what price, or how many were given away” according to the research team.
However, Ripple states that market participants purchased US$20.1 million in Q4 2017. These participants tend to be institutional buyers, and their purchases typically include restrictions that mitigate the risk of market instability due to potential subsequent large sales. Additionally, the company sold US$71.5 million worth of XRP programmatically, as a small percentage of overall exchange volume.
XRP transactions per day have steadily increased in an upward trend since 2014. The network, RippleNet, is composed of; xCurrent, which processes global payments for customers; xRapid, to source on-demand liquidity; and xVia, to plug into RippleNet to send payments.
It was recently announced that xCurrent will be used Chinese ecommerce company LianLian international. Non-bank financial services institution, Cuallix, recently became the first worldwide institution to use xRapid, reducing the cost of sending cross-border payments from the U.S. to Mexico. Moneygram, a remittance service, is also piloting a xRapid program.
At US$0.0067 currently, XRP has the cheapest average transaction cost among other high cap coins (not shown). XRP, Ethereum Classic, and Dogecoin have had a similar fee market over the past few months with Zcash consistently cheaper than all others. For the most part, transaction fees denominated in USD rise and fall in line with the cost of the coin itself.
The network value to estimated on-chain daily transaction (NVT) ratio can be used to assess the network’s relative utility over time, although NVT is difficult to compare between coins which use different transactions types. The XRP NVT ratio has been trending lower since July 2015 suggesting transactional use has increased since that time, reaching a low of 75 in January.
Exchange traded volume is largely led by Korea (KRW) with a >5% premium on Bithumb, an exchange with fee-free trading which inherently inflates reported volume data. XRP has been the most popular market added to Bithumb since being added in May 2017. XRP is not nearly as widely traded in JPY or CNY, largely due to trading pair availability and continues to be added to exchanges around the world, most recently Zebpay in India.
While traders normally use charts from the highest volume exchange, the more broad XRP/Tether (USDT) market has the most available data. These charts show that the explosive gains from late December have been erased.
Indicators like Ichimoku Cloud, Exponential Moving Average (EMA), and chart patterns can be used to determine if the trend remains bullish. Details of the indicators and methods used can be found here.
XRP had been in a bullish triangle consolidation pattern throughout 2017, while holding above the 100EMA on the two-day chart and the 200EMA on the daily chart. After the initial breakout, price found resistance at the yearly R1 pivot and 7.618 fib extension.
A bearish double top pattern has begun to form on high timeframes. However, due to the sharp inverted V structure, an Adam-Eve or Adam-Adam is possible. Horizontal support for the pattern is ~US$0.70. Despite the pattern being bearish, this would suggest a gain well North of US$2.50.
The Ichimoku Cloud metrics on the daily chart are all bearish, with a potential bearish Tenkan bounce at the current price level. However, the distance between the Kijun (mean) and Tenkan suggest that XRP is heavily oversold.
If price cannot break the Tenkan, bearish continuation is strongly indicated. A long, flat Kumo at US$1.73 is a magnet for price so long as price does not make a lower low. Should bullish momentum exist, a push to that zone, near the Kumo twist on February 26th, is likely.
Price has also held above the 200EMA, just as it did during a multi month-long period triangle consolidation pattern. Price will likely continue consolidating between the 50EMA and the 200EMA until either level is broken, with higher volume.
The Ichimoku Cloud on the four hour chart also is decidedly bearish, but price has broken the Cloud for the first time since dropping below the Cloud in January. This is the earliest indication of a trend reversal. A long entry signal would follow a bullish Kumo breakout and bullish Kumo twist, and/or a bullish 50/200EMA cross.
Lastly, the trading in the bitcoin (BTC) market indicates that XRP has bounced off a key horizontal level and broken the 50EMA after completing a bullish reversal chart pattern, the falling wedge. XRP fell from this level after forming a bearish descending triangle in May. The measured move and 1.618 fib extension yield a projected target zone of 20,000-25,000 Satoshis.
XRP is a controversial cryptocurrency for several reasons. First, the supply and consensus mechanism suggests that XRP is neither distributed nor decentralized. While nothing is inherently wrong with this, it can be misleading to newcomers who do not understand the differences and nuances between blockchain projects.
Second, major news outlets have reported banks having no interest in actually using XRP, yet RippleNet continues to announce partnerships with multiple banks and companies around the world, seemingly fulfilling their mission to bring broader adoption of the XRP network across the globe – beyond just speculation.
Technicals suggest a continued bull trend, after a return to the mean from being heavily overbought. A USD value of $2.50 and a BTC value of 20k sats is likely within the next few weeks, should the trend continue with its current momentum.
Crypto market overview: The top three coins face minor bearish correction
- Bitcoin bulls managed to keep the price above $10,500.
- Bitcoin SV (BSV) was the biggest winner among the top 20 coins.
The market faced slight bearish correction this Friday as the top three made minor losses. Let’s take a closer look at how the top three did and then reveal the biggest winners and losers of the day, among the top 20 coins.
Top three coins
- Bitcoin: BTC/USD fell at the $10,650 resistance level and went down to $10,528. The bulls did manage to keep the price above $10,500.
- Ethereum: ETH/USD went down from $225.85 to $220.65 this Friday. ETH/USD has significant market resistance at $226.
- Ripple: XRP/USD went down from $0.321 to $0.320 this Friday. The asset reached a maximum of $0.3227 and a minimum of $0.31.
Biggest winners and losers (top 20 coins)
- Bitcoin SV (BSV) was the biggest winner among the top 20, as it went up by 8.26% and is priced at $146.33.
- Tron (TRX) went up by 8.07% and is priced at $0.028
- Stellar (XLM) went up by 5.41% and is currently priced at $0.093.
Anchorage Chose South Dakota for Its Crypto Custody – Here’s Why
During a tense Senate Banking Committee hearing on Tuesday, in which Facebook blockchain lead David Marcus was skewered over the social media company’s ambitious Libra project, Sen. Mike Rounds (R-S.D.) started his remarks with a brief announcement:
“Mr. Marcus, thanks very much for appearing here before us today. Before I begin my questions, I just want to take a moment to commend the South Dakota Division of Banking for their forward-thinking and willingness to allow for innovation in the digital currency space. Another founding member of the Libra Association, Anchorage, just received permission from the Division of Banking to become a South Dakota chartered trust company.”
Observers may have found it odd given the tenor of the hearing, but indeed, Rounds had it right. “Anchorage, which is a Silicon Valley crypto startup,” he said, “has chosen to open its second headquarters in Sioux Falls.”
Amidst the fear, uncertainty and doubt hanging over the hearings, Anchorage was improbably enjoying its moment in the sun.
The startup recently raised a $40 million Series B on the promise of crypto custody services for institutional investors that are “both more secure and more usable.” Anchorage’s technology avoids the traditional dichotomy of internet-connected hot wallets and offline cold storage in favor of specialized hardware security modules (HSMs). The company’s custom HSMs “will process a given transaction only when certain criteria are met,” according to a company blog post from April.
In June, Anchorage also snagged a seat at the table of the Libra Association alongside some of the world’s most powerful brands. (Anchorage investors Andreessen Horowitz and Visa are also founding members of Libra’s initial 28-company consortium.)
CoinDesk spoke with Anchorage CEO Nathan McCauley the day after the Senate hearing about why shopping jurisdictions made sense and what the benefits of launching a subsidiary in South Dakota are expected to be.
While Wyoming is perhaps the most notable state to court the crypto industry, others have also joined in. Montana passed a crypto-friendly securities law in May. In South Dakota, Anchorage is following in the footsteps of fellow crypto custodian BitGo, which got the green light from state regulators in 2018.
Below is an edited transcript of our discussion.
The cost of living is among the lowest in the U.S. and there are no income taxes, but are there specific reasons you selected South Dakota for your new Anchorage Trust subsidiary?
South Dakota knows trust administration, and that kind of institutional memory means abundant access to legal counsel, auditors, office space and talent. There were others states we talked with where a trust company hadn’t been created in over a decade, and “over a decade” was considered recent.
From top to bottom the state is really interested in seeing innovation happen. The South Dakota Trust Charter allows companies to operate on a national level so you can serve clients from every state. There is regulatory clarity that allows crypto natives to increase yields for clients through banking, staking and other kinds of participation. And surprisingly, South Dakota is one of the largest holders of institutional assets in the country, more than $3 trillion, according to the FDIC, three times the size of New York, followed only by Ohio.
It’s also a really nice business climate. We’re hosting a ribbon-cutting ceremony in a few weeks and the local chamber of commerce is helping put it together.
How long did it take to get the charter?
We were motivated to do it quickly because from the get-go we knew we wanted to be a qualified custodian for our institutional-investor clients. Initial contact was late December. We met with the Division of Banking three or four days before Christmas and we received our charter on July 16, so it took six, seven months.
Who else is part of the South Dakota crypto community?
BitGo and Kingdom Trust are here as well.
What challenges do you foresee at the federal level?
SEC broker-dealer guidance continues to be a work in progress. We’re in good shape because of our licensure but more regulatory clarity is needed for the industry.
Any plans to expand internationally?
Right now our focus is on the United States because the U.S. remains the center of gravity for institutional investment, but we’re open to conversations with folks from the EU and Asia as many of them are interested in working with a U.S.-based custodian.
You recently deepened your ties with fellow Libra Association members Visa and Andreessen Horowitz, which are both investors in your Series B round. What are you most excited about going forward?
The investment from Visa is an important part of our story because it speaks to the kind of investor we’re attracting and the growing interest in cryptocurrency. It’s also very exciting that social networks like Facebook are getting involved in cryptocurrency to make financial services available to a larger portion of the population in a user-friendly way.
We’re just thrilled to be part of it.
BitMEX May Be the First Target of the U.S.; Which Crypto Platform is Next?
The crypto industry was taken aback earlier today when news broke regarding popular leveraged crypto trading exchange, BitMEX, being investigated by regulatory authorities in the United States.
Importantly, news regarding this investigation came about shortly after top officials within the US government criticized the nascent crypto markets, with the Treasury Secretary warning that they would be implementing and enforcing “very strong” regulations in the near-future.
Crypto Trading Platform BitMEX Under Instigation by CFTC
Earlier today, news broke that BitMEX is currently being investigated by the United States Commodity and Futures Trading Commission (CFTC) for allowing Americans to utilize the platform without having the proper licensing and registrations.
The news, which was first reported by Bloomberg, came closely on the heels of comments from top officials within the US government, who offered a less-than-positive perspective on the crypto markets, deeming them as markets rife with crime and fraudulent activity.
HDR Trading Limited, BitMEX’s parent company, declined the opportunity to comment on the investigation, but BitMEX CEO, Arthur Hayes, has previously stated that the company does ban users from the US who attempt to undermine the company policy – which technically does not allow US residents to access the platform.
It remains unclear as to where this investigation could lead, or as to what the consequences could be. But prominent critic of both crypto and BitMEX, Nouriel Roubini, noted in a recent tweet that be believes the allegations set forth by the CFTC are just a “fraction of the sleeze going on in BitMEX.”
US Government About to Crackdown on the Nascent Markets
The CFTC’s probe of BitMEX comes just one day after US Treasury Secretary, Steven Mnuchin, told CNBC in an interview that the government would begin policing crypto with “very, very strong” regulations.
Mnuchin further added that the goal of these regulations would be to ensure that Bitcoin and other cryptos don’t become the equivalent of “Swiss-numbered bank accounts.”
Because it is not possible to actually regulate decentralized cryptocurrencies themselves, it is highly probable that the first target of regulators will be crypto exchanges, as many of them have been operating in the shadows beneath the nose of regulators.
In other countries that have more progressive regulations, like Korea, federal regulators first started targeted crypto exchanges, forcing them to adhere to the strict rules that govern the banking industry.
Although it still remains clear as to when and how the US will go about slapping the “very strong” regulations on the markets, it is likely that more exchanges will begin facing increased scrutiny from groups like the CFTC in the near-future.