By Jenny Lynton
Ripple CEO Brad Garlinghouse recently sparked a heated debate with the declaration that ‘Bitcoin’s influence over cryptocurrency prices could end soon’. Bitcoin (BTC) is often seen as an industry benchmark, so when Bitcoin rides the choppy market tide, Ripple (XRP) and the other altcoins follow a similar wave. However, Garlinghouse asserted that although there’s a ‘correlation between the price of XRP and the price of bitcoin, ultimately these are independent open-sourced technologies.’ Speaking on CNBC’s Power lunch, he reinforced how the market is still in an embryonic stage, so ‘over time you’ll see a more rational market and behaviors that reflect that.’
In light of this, we used the Coinwatch Platform to gain some deeper insights and explore if Ripple has what it takes to jump off the volatile Bitcoin train.
Riding the Bitcoin Wave
Crypto enthusiasts have been quick to brand Bitcoin as the industry marker, so we used the Platform to delve deeper into the recent market trends. In the case of BTC, the coin initially enjoyed a bullish ride towards the end of April, peaking at $9645 on May 6. However, the bears seem to have hijacked the market and the coin then plunged to $7,577 on May 31. Since that point the coin has gained momentum, climbing to its current share price of $7,7721.
In the same period, Ripple experienced a very similar trajectory. On May 6 Ripple bulled ahead to peak at $0.86, before joining Bitcoin on its downward trajectory to $0.65 on May 17. The coin fluctuated around the resistance line, before sliding to $0.61 on May 31. Now Bitcoin has picked up some traction, Ripple has also begun to pick up the pace, climbing to $0.65 on June 3.
As we can see, this data does seem to reinforce the notion that Bitcoin sets the industry standard, so when the coin fluctuates, Ripple and the other coins are swept along for the ride.
How Can Ripple Break Free?
The idea that Ripple can eventually ‘decouple’ from Bitcoin has been a hotbed of debate for Ripple-enthusiasts and commentators alike, dominating discussion forums for a while now. In January user iLee in the XRP chat forum noted that investors tend to look to Bitcoin before trading on its altcoin counterparts. The XRP user said, ‘I think 80% of the XRP/USD traders are listening for the BTC/USD order book and are trying to replicate sell orders when there’s a huge sell-off.’ Other XRP users suggested that this could be solved by the onset of market regulations or resolving the ‘liquidity of XRP so it won’t be so dependent on Bitcoin’.
Shift In The ‘Investor Rationale’
Ripple CEO Garlinghouse believes that the market still relies on investor speculation right now. Therefore, one way for Ripple can to break away from Bitcoin is through a shift in ‘investor rationale’. As the market develops he thinks investors will eventually ‘begin to understand the major differences between cryptocurrencies and their use cases’ and judge individual altcoins by their value and technologies, instead of tarnishing all the altcoins with the same brush.
On one hand, this is plausible as if an investor is scanning the traditional market for a top-performing stock, they would assess the company value independently. So, if a trader researches the Apple (NASDAQ:AAPL), they would examine the recent Apple developments, not Amazon (NASDAQ:AMZN).
The CEO added that there are a myriad of altcoins on the market which serve no purpose, so they will still be tied to the Bitcoin momentum. However, he is confident that Ripple has what it takes to set itself apart.
Ripple’s Strategic Developments
Ripple has achieved a number of strategic developments and tech breakthroughs this year. Garlinghouse emphasized that ‘the company itself had a record first quarter, signing 20 production contracts with new firms’.
One noteworthy sign that Ripple is paving the way for a market getaway, is the landmark partnership between Ripple and SBI Holdings to launch SBI Ripple Asia to ‘install Ripple’s enterprise solutions for cross-border payments at banks across the region’. President and CEO of SBI Holdings Yoshitaka Kitao hailed how “surveying the market, Ripple was the only company that has delivered battle-tested enterprise solutions and global bank customer traction, including commercial deals with top banks already signed in Asia Pacific.’
With a range of significant endorsements and developments like these in the pipeline, it can indeed help boost Ripple’s crypto-credibility with investors and stand-alone value. Garlinghouse added that Ripple also ‘announced a deal with the largest bank in Kuwait on Wednesday, adding to companies like MoneyGram that are already testing XRP for cross-border payments’.
Alt Coins Pairing with Fiat Currencies
Other commentators have highlighted that the emerging trend for exchanges to pair with fiat currencies rather than Bitcoin, could soon lead to a general Bitcoin break away. In February crypto exchange Bitrex announced that it planned to enable users to purchase and trade in USD. Previously users could only trade in Bitcoin to purchase altcoins, which could be a crucial reason why the market is so reliant on Bitcoin. Although it remains to be seen how this will influence Ripple, if this emerging trend for purchasing with fiat currencies continues, this could edge the alt coins closer to a Bitcoin breakaway.
In the ever-changing crypto landscape, the market moves fast. While Bitcoin has dominated the scene since its inception, only time will tell if there is a shift in investor attitude and Ripple can be viewed as a stand-alone coin. In any case, you can keep an eye on the latest developments using the CoinWatch Platform.