What’s behind the XRP rally?
XRP reached $2.90 on Tuesday, its highest level since 2018.
There’s never a dull moment on the blockchain. Here’s what you need to know this week:
Crypto’s total market cap reached roughly $3.5 trillion. Plus, crypto ETFs had a record month, a handful of altcoins are booming, and NFTs are on the rebound.
XRP just hit its highest price in nearly seven years. A closer look at the catalysts behind XRP’s massive swing.
This week in numbers The amount of BTC that Brazil proposed for a national reserve, the net deposits on DeFi protocol Aave, and more stats to know.
MARKET BYTES
Crypto markets are up $1.2 trillion since the election
Crypto’s post-U.S. election rally rolled on for another week, with crypto markets up around $1.2 trillion since Nov. 6.
As of Wednesday morning, BTC was hovering around $95,000, trading flat for the week; ETH prices sat above $3,700, up about 6%; and the broader crypto market as measured by the Coinbase 50 index was also up 6% in the same span.
One of the biggest price-boosting narratives in recent weeks has been the blockbuster success of crypto exchange-traded funds (ETFs), which broke all-time records for the month of November, with spot BTC ETFs and ETH ETFs notching a cumulative $7.6 billion of net inflows.
What might happen next? As of Monday, many pro traders were optimistic about the future of both cryptocurrencies, with one options market reporting that 77% of ETH open interest and 66% of BTC open interest was made up of bullish bets.
Here are three more market stories you should know about.
The tokens that could power this cycle’s “altcoin season”
One of the biggest crypto storylines of this week was the spike in value of a wide range of tokens — especially relative to bitcoin, whose price has remained just below the six-figure mark — leading analysts to debate whether the next “altcoin season” has arrived.
So what kinds of cryptocurrencies saw the biggest gains? In recent months, memecoins have surged in popularity, but since mid-November their value has plateaued, reports The Block, and some analysts are arguing that “market participants [are now] prioritizing projects with strong foundations” like DeFi tokens.
Another category that has seen major upswings are cryptocurrencies related to the tokenization of real-world assets, such as Hedera, Chainlink, and XRP.
By the numbers… One way to measure the rise of altcoins is “bitcoin dominance,” or the percentage of the total crypto market that belongs to the biggest cryptocurrency. As of Tuesday, it was around 56%, down from November’s high of around 62% — meaning that non-BTC tokens have made up a lot of ground.
MicroStrategy, Marathon Digital double down on BTC
Another potential driver of currently high crypto prices has been an unprecedented buying spree from the publicly-traded software firm MicroStrategy.
Over the last week the firm sold 3.7 million shares of its stock and used the funds to make its fourth major weekly purchase of bitcoin. The $1.5 billion in BTC it acquired this week brought MicroStrategy’s total holdings to around $38 billion.
The firm’s strategy has been a huge winner on Wall Street, with shares up more than 500% this year and “outperforming almost every other major stock,” according to Bloomberg.
Using MicroStrategy’s strategy?… Crypto mining firm Marathon Digital reported buying $618 million in BTC and announced plans to raise $700 million more to “acquire additional bitcoin and for general corporate purposes.” Marathon is the second-largest corporate bitcoin holder, with around $3.3 billion in BTC.
Big-name NFTs like CryptoPunks continue to rebound
Over the last couple of years, NFTs have been (repeatedly!) declared dead. And yet those reports have yet again turned out to be premature, with NFTs rallying in recent weeks alongside the broader crypto market.
“Data from CoinGecko for December shows that the sector's market capitalization has reached $8.8 billion, up by 17.3% over a week,” Decrypt reported Monday. “The same dataset also points to a surge in volume: daily trading across all chains has jumped nearly 48% in the past 24 hours.”
As of Tuesday, many major NFT collections were sharply up for the week. Much of that activity was concentrated in a handful of projects, with CryptoPunks, Bored Ape Yacht Club, and Pudgy Penguins collectively capturing nearly three quarters of the total market.
On the other hand… While the top NFT projects are doing well, there don’t seem to be as many people trading NFTs as there were back in 2021 — or even as recently as May. Unique buyers in November totalled just 662,000, compared to more than 1 million in May.
MAKING RIPPLES
Why XRP just rallied more than 450%
Bitcoin has been inching closer to $100,000, Ethereum has regained momentum, and Solana just notched a new all-time high — but the breakout token of the post-election rally might just well be XRP.
As of Tuesday, XRP, which is the native token of the payments network XRP Ledger, was up around 480% in the last month, peaking around $2.90 — its highest price in nearly seven years. As a result of the spike, XRP gained around $100 billion in market cap and surged past Solana, among others, to become the third-biggest cryptocurrency by market cap, after BTC and ETH.
So, what exactly is XRP and why is it on the verge of new highs? Let’s dig in…
What are Ripple and XRP?
The XRP Ledger (XRPL) blockchain and its native XRP token were launched in 2012. They’re designed to work together as a fast, cheap, and scalable peer-to-peer global payments system.
Unlike most cryptocurrencies, XRP is pre-mined and has a maximum supply of 100 billion tokens.
XRP Ledger has also been gaining popularity as a platform to host the tokenization of real-world-assets, including tokenized money market funds.
Ripple (formerly Ripple Labs) is a blockchain company that uses XRP as part of its digital payment network, which is a decentralized alternative to traditional cross-border payment rails like the SWIFT system used by global banks.
For years, XRP prices were muted as a result of enforcement actions against Ripple, including a lawsuit by the U.S. Securities and Exchange Commission (SEC) that began in 2020 and resulted in Ripple’s 2023 legal victory. In August, Ripple paid a $125 million fine related to sales to institutional investors, effectively ending the suit.
Why is XRP breaking out?
Stablecoin developments: Ripple is reportedly on the verge of launching an institutional investor-focused U.S. dollar stablecoin called RLUSD on XRPL, a move that Ripple CEO Brad Garlinghouse says should serve “as a complement, or even an accelerant to what Ripple’s doing at its core.” “XRP’s recent strength seems to be driven by the news last week that NYDFS is close to approving Ripple’s stablecoin,” Presto Research’s Peter Chung told The Block.
ETF applications: Following on the success of the spot BTC and ETH ETFs that launched last year, Wall Street is also anticipating the potential arrival of ETFs for XRP. This week, WisdomTree — which manages more than $100 billion in assets — became the fourth firm to seek approval from the SEC to launch a spot XRP ETF, joining Bitwise, 21Shares, and Canary Capital.
Regulatory optimism: XRP is also likely benefitting from the general market optimism regarding the incoming U.S. presidential administration, along with the most pro-crypto congress ever, and the expectation that the regulatory landscape will improve with the passage of crypto legislation in the coming year.
Who is buying all this XRP?
At one point on Tuesday, XRP saw more trade volume than BTC and ETH combined. So, who is doing all that trading? According to analysts, retail investors are driving a surprising amount of XRP’s current rally, even as Wall Street begins to pour money into the asset in anticipation of ETFs.
In a sign of retail participation picking up, more than 22,000 XRP wallets were created on Sunday alone, according to crypto-research firm Santiment.
The bottom line…
Way back in 2018, XRP experienced a similar rally, and actually eclipsed ETH in market cap for a brief period when both tokens were valued at around $22 billion. Is there a scenario where that could happen again?
Only time will tell — but it has a ways to go. ETH’s market cap is still three times larger than XRP’s, and even if XRP returned to its all-time high of $3.84 today, it would still be about 30% below Ethereum’s total value.
NUMBERS TO KNOW
$31 billon
Amount deposited on decentralized lending platform Aave — up 50% from the month before. “At its current level of net deposits, Aave would be ranked 63rd by consolidated assets among insured U.S.-chartered commercial banks, ahead of Commerce Bank and BNY,” notes Unchained.
$45 million
The amount in royalties generated from sales of NFTs from RTFKT, the virtual wearables startup. The company, which was acquired by Nike in 2021, announced on Monday that it would be winding down by the end of January. The project’s more than two dozen collections generated around $1.5 billion in trading volume.
5%
The maximum amount of Brazil’s currency reserves that would be allowed to be held in bitcoin, if a new bill proposed in the country’s congress was passed. The bill would also stipulate that the government create programs to educate the public about crypto assets.
SECURITY PSA
Educating family and friends about crypto
There is a lot of excitement as bitcoin (BTC) and other digital assets reach record highs. With that comes a growing need for education around safe crypto practices and how to spot and avoid spoofing, phishing, and other kinds of scams. Family gatherings over the holidays are a great time to share this knowledge.
Follow these quick tips on educating loved ones about crypto.
TOKEN TRIVIA
When was Dogecoin originally created?
A
2011
B
2013
C
2015
D
2017
Find the answer below.
Trivia Answer
B
2013
