First things first: No one is going to be able to accurately tell you the reasons behind price shifts in the cryptocurrency markets. While price forecasters, analysts, etc. can all make reasonable predictions, there’s no way for one to know, without fail, all of the information behind a price movement. Realistically, that’s simply the way that it is (and that goes for equities, commodities, futures, forex, etc.); however, that doesn’t mean that we can’t reasonably nail down some of the potential reasons, or perhaps a combination of reasons, as to why Ripple’s XRP has been doing so well.
For those of you who may not have been paying attention these last five days, Ripple’s XRP has been blowing out of the water. Granted, we’re nowhere near all-time highs for the cryptocurrency that we saw in late 2017/early 2018 (above $3.00), but given the current market conditions in the crypto world, XRP has been doing phenomenally well.
(Note: Yes, I know some people would prefer to not even use the term “cryptocurrency” when discussing Ripple’s XRP token, but for the sake of keeping things easy, that’s how I’m going to refer to it.)
Over the past week, XRP has surged in price to nearly triple in value. At one point, the cryptocurrency gained an impressive 80% within a 24 hour period. For those who aren’t already familiar, here’s what the price chart looked like:
Prices are starting to normalize a bit more, but there remains a strong up-trend over the past few days that’s pleased investors quite a bit. But what exactly has been causing this drastic price gain? For me, there’s really one big contributor that sticks out; here’s why.
PNC Bank Partnership
Yes, I know, I know. With the history of the cryptocurrency community and various initial coin offerings (ICOs), I know that invoking a new “partnership” between a blockchain-based service and established company almost feels like a meaningless buzzword at this point. However, this most recent announcement from Ripple is one that actually makes sense for the blockchain community to be excited about. Ripple’s announcement wasn’t another typical announcement that carried no weight and seemed like it merely for show or hoping to “hype up” traders in a self-serving attempt to inflate the price of the cryptocurrency.
On September 19th, Ripple announced that one of the top ten banks in the United States, PNC Bank, had joined RippleNet. For those not familiar with the system, RippleNet is a payment processing network created by the Ripple team to provide “one frictionless experience for sending and receiving money globally.” According to the announcement:
“Now, a commercial client in Pennsylvania receiving a payment from a UK buyer will be able to receive payments against their invoices instantly, transforming the way they manage their accounts receivable and allowing them to better manage their working capital.
The bank joins some of the world’s leading financial institutions on the network, including Banco Santander, American Express and the SBI led, Japan Bank Consortium to name a few.”
Obviously this announcement was a positive one for the Ripple community. Unlike other cryptocurrency “partnership” announcements, the use of RippleNet by more traditional financial institutions significantly helps the legitimacy of not only cryptocurrencies, but also blockchain-based solutions in the financial technology (fintech) world. It’s no surprise that traders (likely) got excited on the news, and we even saw that in PNC’s share price as well (NYSE: PNC). After news of PNC embracing RippleNet, the bank’s share price was rewarded with a generous 4% boost after following several days with a declining price.
Ripple has been building this network for handling international transactions for a while and has also partnered with several other high-profile financial institutions (as mentioned in their quote above). RippleNet is intended to offer banks an easier, faster, and more efficient means of handling international payments and is built to be an improvement on the current SWIFT global payments network. In my personal opinion, this is hands down the main reason I would be bullish on Ripple and their XRP token. While there is, of course, much debate about Ripple’s XRP in the cryptocurrency community, the company has taken a significantly different approach when it comes to interacting with authorities that I’m personally quite fond of.
Unlike other cryptocurrencies — and a certain portion of the cypherpunk crypto community (one might prefer to use the term “purists”) — Ripple has always been open about interacting with financial institutions and regulators. Certainly not as radical as other crypto enthusiasts, the Ripple team doesn’t want to overtake and destroy fiat currency, but rather improve on the system that we already have. And, while I’m certainly not a shill for the XRP token (and quick disclaimer: I currently hold none whatsoever), I can understand the case made for the cryptocurrency. (As the old adage goes: “If you can’t beat ‘em, join ‘em.”)
I understand the reservations certain crypto purists have on the matter, but the fact that at least one cryptocurrency is taking efforts to not necessarily fight the system shows, at least to me, promise in the industry as a whole. Of course, there will always be a place for cryptocurrencies like Monero and other privacy coins that insist on the benefits of cryptocurrency over traditional fiat for the sake of privacy, anonymity, decentralization, etc. While those are all fair and reasonable attributes, they’re not the end all, be all of the crypto world for many people, especially investors.
What Ripple is doing, for better or worse, is bridging the gap between the crypto sphere and the rest of the fintech world and one can’t help but see (at least some) of the benefits that comes along with that. Clearly, as we’ve seen in the past week, investors and traders both seem to like what’s happening. Perhaps those who are die-hard crypto purists need not to discount Ripple’s XRP in its entirety, but merely recognize that it’s simply serving another purpose and that the team behind it is just in another group of crypto enthusiasts.