Will Ripple Recover From Latest Crypto Market Selloff?
With the best part of the cryptos market being in the red since the beginning of this year, investors across the globe are worried that the long-prophesied crypto bubble has finally popped. Since December last year, the digital currencies market has been on a steady decline with most cryptos shedding nearly half of their value.
While it is not possible to tell how far this selloff will go, it is in line to say that the dip presents an opportunity to buy low and sell high. Crypto markets have proven to be very resilient in the past regulatory crackdowns, and there are no reasons to believe that they will not do so in the current turbulence. However, there is a chance that there are those that will not make it back to top again.
Ripple (XRP), the third largest cryptocurrency by market cap, tops the list of the most analyzed altcoins today with analysts predicting that it is bound to overtake Bitcoin in the future. In the recent tremors, the altcoin has lost nearly 60 percent of its value leaving investors wondering whether this is the end or an opportunity to jump in. My bet is that ripple will be among the best performing cryptos in 2018 due to a number of reasons.
First, the selloff witnessed in the last few days has been as a result of governments in China, South Korea, and France announcing that they will be imposing stringent regulations on crypto trading. The markets have cooled off and are regaining rapidly a sign that investors have already come to terms with the fact that the future will involve more government guidelines.
Consequently, the current crypto prices have already taken regulatory risk into account and therefore the likelihood of a regulatory triggered slump in the future is limited. With regulators in the game, traders are also highly likely to start focusing on the underlying value of the various cryptocurrencies which will be a big plus for the industry in general. However, this will depend on the regulatory approach which in my view is likely to be constructive given the irreplaceable value of blockchain, the technology behind cryptocurrencies.
Enter XRP – the altcoin past success has largely been attributed to its underlying value which means that it is in a better position to survive even under the harshest regulatory environment. Apart from being a medium of exchange, the Ripple token acts a bridge currency for value transfer between any two institutions that don’t have a trusted relationship. It is also partly centralized which places it in the middle of the traditional financial systems and the modern decentralized ones.
While the centralization puts the altcoin at loggerheads with the whole idea of cryptocurrencies, it offers a better chance of survival in case of state instigated regulatory crackdowns. So far, this is the most significant risk in the industry since most governments are not likely to lie down and let a system whose aim is to move power away from them get established. Certainly, decentralization will take full control of the global financial systems, but the transition is likely to take time. Before then, the hybrid blockchain approaches such as the one taken by Ripple will remain preferable for investors.
Ripple Inc recent partnerships with global financial and technology giants including Bank of America, Alphabet Inc, Accenture PLC, and Banco Santander further cement its legitimacy making it the best choice for risk-averse investors. It is also important to note that XRP is listed in major social trading and investment networks, making it easier for buyers to buy and sell and also access information.
While I cannot say with certainty that the crypto selloff is over, we believe that investors looking to invest for the long term are okay buying at the current prices. As witnessed in the last 24 hours, XRP has bounced back 65 percent is a signal that it will be among the top performers once the regulatory dust has settled. With Ripple Inc announcing a possible partnership with Moneygram and Amazon, the American multinational retailer, there is even more hope that XRP will maintain its position as the best performer in 2018.
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