It looks like the cryptocurrency bubble has finally popped, or at least, that’s what the bears are saying after more than $100 billion was erased from the cryptocurrency market in only a single day. Bulls, on the other hand, have a much view of things, especially for their favorite digital currency. When it comes to ripple in particular, one of the biggest bull arguments is its utility as a payment system rather than as an asset, but it is that very argument which makes it so difficult to make a ripple price prediction.
The Gartner Hype Cycle in a ripple price prediction
After peaking above $3 this month, ripple plummeted under 80 cents, the lowest level it has traded at in more than a month. Profit Confidential argues that when looking at the selloff in the ripple price, it’s clear that it was inevitable, based on the Gartner Hype Cycle. The cycle occurs in give steps, according to Gartner: Innovation Trigger, Peak of Inflated Expectations, Trough of Disillusionment, Slope of Enlightenment, and Plateau of Productivity.
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Profit Confidential makes the case for stage two being passed in early January and then stage three possibly being entered with the price crash. The writer’s ripple price prediction stays at $10 for now, but he warned that he’s concerned the digital currency “won’t be able to bounce back within 11 months.”
Bears control ripple price predictions… for now
CoinDesk notes that the bears are “in control” of ripple price predictions. In a post on Thursday, the blog updated its ripple price prediction, warning that both the 5-day and 10-day moving averages are shifting lower, which implies a “bearish setup.” Further, the relative strength index was pointing to further declines in the value of XRP tokens. CoinDesk correctly called the testing of the support at 86.47 cents. The next key support level is 64 cents, the low on Dec. 18.
On the other hand, CoinDesk also offered a bullish scenario. A daily close by the UTC time higher than the 10-day moving average is required in order to “signal bearish invalidation,” which might result in a consolidation in the short term.
Selloff erases $100 billion from crypto market
So where is the value of XRP tokens—the technical name for the cryptocurrency commonly referred to as ripple—heading to next? If you’re in a quandary after the widespread selloff that touched most, if not all cryptocurrencies, then you’re not alone. Bitcoin, XRP, ethereum and even lesser-known cryptocurrencies such as stellar all sold off on Thursday, which bears would argue demonstrates just how big a risk exists with all digital currencies—including those with utilitarian value attached to them, such as ripple.
Anyone who wishes to keep risking their hard-earned cash on XRP (or any other cryptoassets, for that matter) must now dust themselves off and set their own ripple price prediction in order to see whether it’s really worth the risk. Thursday’s selloff shows how great the risk is with cryptoassets, although any investor who’s bullish on any particular stock or asset knows that with great risk can come great reward—if they end up being correct.
Problem with making a ripple price prediction based on utility
Unfortunately, bulls who bought into the utilitarian value of XRP tokens as a payment system, which is what they were designed to be for the financial industry, may have started to lose heart as speculation about whether banks will actually use it started to swirl. Ripple quickly became the darling of the crypto market early this year as bulls saw a value beyond an asset such as silver or gold. Then there started to be murmurs that Coinbase was planning to add support for XRP, but that hasn’t happened yet.
But what’s potentially even more damaging for ripple is a controversy over whether it can actually do what it was originally created to do: replace wire transfers within the financial industry. As more and more banks in Asia agreed to try it out, it looked like the sky was the limit, but then Finder received conflicting stories on use of XRP at Banco Bilbao Vizcaya Argentaria (BBVA), including a rumor that the bank wasn’t liking it, although a spokesperson later officially said they were still trying it out.
Ripple Labs founder hits back at the doubters
At any rate, the controversy caused enough smoke that Ripple Labs CEO Brad Garlinghouse addressed the bears at the Blockchain Connect conference in San Francisco recently. According to Finder, he told the crowd about a conversation he had with AT&T CEO Randall Stevenson about VoIP, and Stevenson told him that AT&T would never use Internet protocol for voice calls, but now the company’s whole network runs on IP.
Garlinghouse equated that experience to the debate about whether banks will ever use XRP for wire transfers, adding that banks will use any product “that helps them deliver a better product to their customer if it reduces their cost and it solves a real problem.”
Thus, bulls who take the utilitarian view of XRP don’t necessarily have to discount it when making their own ripple price prediction. It doesn’t sound like the story is over yet, and anyway, there seem to be enough banks trying it out that there is still a chance that it could gain a foothold.
Where the real threat may be: regulators
The general consensus among both bulls and bears making a ripple price prediction is that regulation jitters seem to be holding all cryptocurrencies back. Officials in multiple countries have been speaking out against digital currencies. Indian Finance Minister Arun Jaitley was one of the latest to shake the crypto markets with promise of regulation, even expressing intent to block digital currencies entirely. Meanwhile, China has shut down some crypto exchanges, and South Korea was creating laws which impact the crypto market.
Other than regulation, investors have been worrying that cryptocurrency exchange Bitfinex may have been inflating the price of various digital currencies. The New York Times initially reported on that earlier this week. Regulators feel there’s enough there to warrant in investigation too, as Bloomberg reported on Tuesday that Bitfinex and the cryptocurrency firm Tether received subpoenas from the U.S. Commodity Futures and Trading Commission.