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Mysterious Surge! Why is Ripple's XRP Surging? Can these Clues Provide Answers?

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Mysterious Surge! Why is Ripple

Lately, Ripple's XRP token has been soaring, with a seven-day increase of 127% and a price of 0.6. This surge has left many wondering: What's the latest news driving XRP's recent performance? Here are some clues:

Ripple Significantly Reduces XRP Sales

Previously criticized for selling XRP tokens to survive, Ripple has now reduced its so-called "programmatic sales" strategy and stopped selling its XRP holdings on exchanges, opting for over-the-counter (OTC) trading only.

Reports from the fourth quarter of 2019 show that programmatic sales have ceased, with sales now conducted OTC with institutions. Despite the halt in programmatic sales, from Q4 2019 to Q2 2020, sales to institutions via OTC totaled $47.38 million.

Additionally, while OTC and programmatic sales are no longer reported in the financial statements from Q3 2020, new entries for On-Demand Liquidity (ODL) and repurchases have been added.

On-Demand Liquidity (ODL) is a new service promoted by Ripple, allowing the platform to convert the sender's currency into XRP tokens for transfers, facilitating real-time settlement by converting it into the target currency.

Repurchases are one of the means by which Ripple maintains liquidity for its ODL service. In a second-quarter report, Ripple emphasized that as financial institutions adopt ODL, the market liquidity for XRP has improved. Ripple acts as an indirect buyer in the secondary market, continuing to buy XRP at market prices.

Overall, Ripple has simply reduced its token sales and not stopped them; currently, ODL serves as the method for token sales.

ODL + Line of Credit

In October this year, Ripple introduced a Line of Credit service for companies using the ODL service. These companies can obtain a line of credit to purchase XRP for operational expenses and pay a fee upon repayment. The service is seen as a way to provide financing using XRP as a payment method, not for tax purposes or renting/borrowing XRP.

ESCROW Accounts

According to Ripple's rules, 1 billion XRP from the company's controlled 55% supply is released into circulation each month. In Q3 2020, 3 billion XRP flowed out of escrow accounts, with 2.4 billion XRP returned, leaving 600 million XRP added to the total supply.

Collaboration with Exchanges

The third-quarter 2020 report released in early October showed:

FTX: Ripple announced that XRP is available for trading against USD on FTX and can be used as collateral for all FTX contract products. Reportedly, XRP on FTX had the highest open interest among all exchanges at that time.

Binance: Binance also introduced XRP/USD contract trading pairs and allowed XRP as collateral. Additionally, they launched XRP options products and XRP leveraged tokens.

XRP Smart Contract Platform Airdrop

The Flare network, aiming to liberate non-Turing complete blockchains, chose XRP as a starting point. This allows XRP holders to receive SPARK tokens for the project and enables the XRP ecosystem to utilize smart contracts.

Ripple Emphasizes Asset Arbitrage Speed

Ripple also stated in its Q3 2020 report that XRP is a highly suitable asset for arbitrage, enabling market makers and investors to quickly carry out arbitrage. They mentioned that compared to Bitcoin and Ethereum, XRP has faster network speeds and shorter cross-exchange transaction times, allowing for advantageous trades.

Do These Clues Have an Impact?

Following the significant price surge on November 20-21, neither the XRP official team nor CEO Brad Garlinghouse released any groundbreaking positive news. The clues mentioned above are mixed with bullish and bearish sentiments. The reasons for the rapid price increase cannot be solely attributed to repurchases, as there are still significant XRP outflows from sales. These clues emerged in October and cannot definitively explain the rapid surge.

Even a staunch XRP critic suggested that CEO Brad Garlinghouse might have been selling tokens every month to suppress price appreciation, allowing enthusiasts to buy in at lower prices.

As various cryptocurrencies rise in a bull market, whether XRP's remarkable surge is coincidental or has underlying reasons remains a topic for discussion.

It is worth noting that XRP is still far from its all-time high of $3.70, and investors should evaluate with caution.