As a long-term crypto investor with a keen interest in the XRP and Stellar (XLM) ecosystems, I find Schwartz’s perspective on their similar price movements intriguing. Having closely followed both projects since their inception, I can attest to the interconnected history and market dynamics that have shaped their price behavior.
In a recent community conversation, the striking price resemblance between XRP and Stellar (XLM) was brought up. Ripple‘s Chief Technology Officer, David Schwartz, shared his insights on this intriguing price correlation.
Schwartz, a pivotal figure in the development of XRP Ledger, proposed that the synchronous price fluctuations of XRP and XLM might be driven by influences beyond their individual ecosystems. He acknowledged the existence of conflicting evidence on this matter, highlighting its intricate nature.
One important finding from Schwartz’s analysis was the effect of Stellar’s substantial token burn last year. Although roughly half of the total tokens were destroyed, this occurrence didn’t significantly influence Stellar’s price or its relationship with XRP.
Schwartz was convinced that a comparable destruction of XRP held by Ripple wouldn’t boost the value of XRP based on his analysis. He referred to graphs displaying the price trends of XRP versus XLM preceding and following their respective burns, revealing minimal difference.
What may lie behind this anomaly?
Although XRP and XLM share comparable price trends, their token economics differ significantly. XRP boasts a larger total supply of 99.98 billion tokens versus XLM’s 50.001 billion. With XRP, only 55.43 billion tokens are currently circulating in the market, while for XLM, this figure stands at 28.976 billion. Concurrently, XRP is priced at $0.525 and holds a market capitalization of $29.1 billion, while XLM is valued at $0.1083 and has a market capitalization of merely $3.14 billion.
As a crypto investor, I’ve noticed that the prices of XRP and XLM have a strong correlation. This connection can be explained by their interconnected history and market dynamics. I’m particularly interested in this observation since XLM was created by Ripple co-founder Jed McCaleb as a decentralized alternative to XRP. Consequently, the Stellar ecosystem, which is home to XLM, often mirrors the price movements of XRP. With investors frequently seeking opportunities in related assets, capital flows into the market and ultimately, the price dynamics of these two cryptocurrencies become more aligned.
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2024-05-27 11:28