Ripple CEO: Altcoins to Soon Decouple from Bitcoin’s Price Gyrations
The cryptocurrency sector attracts a lot of mainstream media attention due to monumental investment returns, with much of the price movements attributed to bitcoin. But, the CEO of Ripple, Brad Garlinghouse, believes that this phenomenon could soon end, and cryptocurrencies may decouple from bitcoin’s price action before the end of 2018.
Market to Soon Decouple From Bitcoin
Garlinghouse refers to the cryptocurrency market movement in general, which seems to wane as bitcoin prices plunge, and vice versa. However, as per a report on CNBC, the entrepreneur believes that markets will soon acknowledge the differences between cryptocurrencies, and start to treat the market as several entities rather than one depending on the pioneer cryptocurrency.
“There’s a very high correlation between the price of XRP and the price of bitcoin, but ultimately these are independent open-sourced technologies. It’s early, over time you’ll see a more rational market and behaviors that reflect that.”
The 90-day correlation between BTC and XRP has historically been positive. Source: Coinmetrics
While Garlinghouse’s San Francisco-based firm Ripple has developed a blockchain framework to facilitate faster cross-border payments for banks, the company’s native XRP token is offered “optionally” to clients to conduct transactions.
In terms of business, Ripple had an impressive first half of 2018 and signed over 20 production contracts with banks across the globe, including Kuwait Finance House and MoneyGram.
Garlinghouse: 99 Percent of Crypto Will Vanish in Ten Years
Notwithstanding the parent company’s profits, XRP lost over 70 percent of its value in that period and was amongst the worst performing cryptocurrencies. However, the entire cryptocurrency sector has been plunging since December 2017 and has lost over 50 percent of its total market, according to data collated on CoinMarketCap.
“It’s still a nascent industry, the speculation in the market dominates the trading activity. “I think it’s a matter of time until people better understand the different use cases.”
As per CoinMarketCap, there are over 1,600 active cryptocurrencies in the market, with over 133 cryptocurrencies having a total market cap of over a $100 million.
However, Garlinghouse predicts that over 99 percent of digital assets will go out of existence in the next ten years, stating that a lot of players with products which do not solve a real-world problem will eventually get “washed out.”
The CEO’s comments are firmly grounded in reality. While some cryptocurrencies have no apparent use case or deploy blockchain in areas better off without the technology, even Ripple themselves have been accused of utilizing ostentatious marketing techniques to lure investors, such as holding celebrity-endorsed events.
ICOs Attract Attention from the SEC
Additionally, the market is rife with fraudulent Initial Coin Offerings (ICOs), which have gained notoriety for fleecing investors to the tune of millions. Interestingly, a recent ICO was shut down by the SEC in April 2018 and was promoted by Floyd Mayweather and DJ Khaled.
Garlinghouse added his thoughts:
“The SEC is getting involved as they should because there have been frauds committed. We have been an advocate of yes the government should get involved, the government should be protecting investors and companies but there’s also examples of real utility.”
The classification of cryptocurrencies remains a telling matter in the U.S., with the SEC considering all digital assets as “securities.” In March 2018, Jay Clayton, Chairman of the SEC, made it clear that all ICOs are constituted as securities.
However, Ripple maintains that their native token is not a security. To this effect, Garlinghouse said that XRP “has real utility.”