After a record-setting month in December, the majority of cryptocurrencies are crashing – and Ripple is no exception. But why is the Ripple price going down?
A Different Kind of Currency
Like the majority of cryptocurrencies, the Ripple price has been incredibly volatile. While it has seen immense growth overall and has the potential to threaten Bitcoin’s top spot in the coming years due to the incredibly high market cap, it’s still subject to the meteoric highs and devastating lows felt by the rest of these unprecedented investments. But what makes the Ripple price different from Bitcoin and the rest of the 100+ alternative currencies? The main thing that separates this currency from the crowd is the fact that it’s developed by a central company – for better or for worse.
While the Ripple price is currently suffering from the same crash as Bitcoin and other major currencies, it has a lot of potential to become the next major player on the cryptocurrency scene if it’s able to bounce back from this downfall – largely due to the parent company’s willingness to play ball with traditional financial institutions.
Cryptocurrencies as a whole have turned the idea of traditional investing on its head, offering a low barrier to entry and easy accessibility to the average person looking to spend some money on a rather risky investment in the hopes that the crypto boom continues and they start to see some serious returns. However, because these currencies aren’t tied to any real company or other real-world entity, the price largely fluctuates based on supply and demand. With a total market cap in the hundreds of billions, cryptocurrencies are getting too big to ignore, and governments and other regulatory bodies are hesitant to fully embrace change that currencies like Bitcoin are trying so hard to force.
By responding with regulation on a category of investments that has thrived due to the lack of constraints, these governments threaten the market dominance of currencies like Bitcoin – and their hesitance is already being reflected in this most recent crash.
The Ripple price is seeing the same sort of effects as Bitcoin and the other currencies with the most recent crash, but the fact that the company behind the currency has an impact on the direction and widespread adoption of the currency likely means good things for the future Ripple price. The financial institutions are impossible to ignore at this point, and they seem to have their sights set on cryptocurrency. By compromising and working together with traditional investors and regulatory bodies, the Ripple price may soon surpass that of Bitcoin.
Why Is The Ripple Price Going Down?
Although the Ripple price has the potential to bounce back and make the currency even more an industry powerhouse than it is currently, the fact remains that the currency is currently suffering from a pretty major slump. The question remains, then, why is the Ripple price going down?
The Ripple price is dropping largely for the same reason as the rest of the cryptocurrency market: partly due to the inherent design, and partly due to the fact that governments and other regulatory bodies are starting to show hesitation when it comes to embracing this new form of investment technology. Bitcoin saw a big drop after a document leaked from China’s government detailing a plan to tax cryptocurrency miners at a higher rate within the country – a major problem for the many mining organizations that call the country home due to the low costs of utilities. Israel and South Korea are other countries that have expressed concern regarding the idea of Bitcoin, with Israel decrying the lack of regulation and South Korea adding limitations on who can invest in Bitcoin as well as requiring investors in the country to trade using their real name.
Although the Ripple price should bounce back in a different way when compared to the rest of cryptocurrencies – at least moving into the future – the fact remains that it’s very similar to the rest of the market at its core. As such, it’s subject to the same sort of problems that affect larger currencies like Bitcoin and Ethereum.
All cryptocurrencies tend to take a dive even after just rumors or the actions of a single website. After a large value database named CoinMarketCap removed South Korean Bitcoin data from their calculations, many currencies dropped lower in response. The fiasco with Bitconnect allegedly being structured similarly to a Ponzi scheme didn’t help matters either, with a lot of money being flushed out of the market as investors were taken advantage of by the unique crypto loaning format.
Like all cryptocurrencies, the Ripple price has the potential to recover, and it’s likely that this downturn is only temporary. Ripple’s unique position as a product of a company and current cooperation with banks may make it uniquely equipped to weather the storm as regulations start to cripple other cryptocurrency investments.