Over the past week, the market has seen some massive changes, with Bitcoin dropping below the $5,000 key resistance level. The Bitcoin Cash hash war has also surfaced, with some connections being made between the war and the market crash.
The intense downtrend of the market is finally taking a toll on the best performing digital asset of the month, XRP. The token is now the second biggest cryptocurrency in the world but it is no longer up in value on a monthly basis. Throughout the past 30 days, XRP seems to have maintained the $0.40 level in a decent manner with minimal losses even during a period in which the price of Bitcoin and other big currencies fell by up to 20 percent.
As reported by CCN:
“As a liquidity network that provides major banks and financial institutions the ability to move cross-border payments with low fees, a large supply of XRP is crucial for the Ripple blockchain network to operate.”
In a similar way to EOS, which integrated several controversial regulations on its protocol to disallow investors from holding onto EOS for an extended period of time without using it, XRP needs to have a certain amount of XRP in circulation to ensure that transactions are seamless for financial organisations.
The CEO of Ripple Labs Brad Garlinghouse explained last year that XRP is placed in an escrow account and is spread out by Ripple Distribution to the public. Garlinghouse said:
“The recently launched Escrow feature in XRP Ledger allows parties to secure XRP for an allotted amount of time or until specific conditions are met. For example, Escrow allows a sender of XRP to put conditions on exactly when a payment can be completed, so the payment remains cryptographically locked until the due date.”
During this week there has been over $15 million worth of XRP moved from the Ripple Distribution wallet to an unknown wallet which has brought in more XRP into the market.
When a digital assets supply is artificially increased and the demand from investors in the market stays the same then this has a negative impact on the value of the asset in the public markets.
Over the past day, the value of XRP fell from $0.48 to $0.41 at its daily low. XRP recovered from $0.41 to $0.43, recording a daily loss against the US Dollar of around ten percent.
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