What Determines The XRP Ripple Price AUD? A Complete Guide

Ripple (XRP) is the fourth-largest cryptocurrency by market capitalization as of the time of writing. Unlike the top two cryptocurrencies, Bitcoin and Ethereum, the price of Ripple has somewhat escaped the spotlight. In this guide, we will explore what determines XRP Ripple Price AUD and what you, as an investor, should look out for!

WHY IS RIPPLE DIFFERENT?

Firstly, it is important to understand that similar to Ethereum, ‘Ripple’ refers to the network. The cryptocurrency is XRP, much like the Ethereum cryptocurrency is actually Ether. However, many investors use Ripple and XRP interchangeably.

Ripple is very different to Bitcoin and Ethereum for a number of reasons. We have covered many of these in our previous post, however we want to briefly reiterate them below:

1. Unlike Bitcoin and Ethereum, Ripple is not decentralised. This means that Ripple is controlled by a central entity, namely Ripple Labs. Ripple Labs is a company that employs more than 500 staff who oversees the issuance, distribution and marketing of XRP.
2. Unlike Bitcoin and Ethereum, Ripple is not mined. Instead, they are released by Ripple Labs in instalments.
3. Ripple prides itself in having some of the lowest transaction fees in all major cryptocurrencies. In fact, $50 million in XRP was sent in one transaction and it only costed 30 cents!
4. Ripple is actually liked by banks – unlike Bitcoin and Ethereum. The mission of Ripple is always to facilitate seamless cross-border transactions for financial institutions. Bitcoin, on the other hand, is ‘people’s money’, taking power away from central banks and governments.

As we can see, Ripple is its own unique beast in many ways. Does this mean that Ripple Price AUD will depend on very different factors compared to Bitcoin and Ethereum? Keep reading!

WHAT WILL DRIVE RIPPLE PRICE AUD ALONGSIDE BITCOIN AND ETHEREUM?

There are a number of factors that will drive the AUD price of all cryptocurrencies, including XRP. This includes:

1. the mainstream adoption of cryptocurrency as a whole
2. a weaker Australian dollar compared to the USD
3. favourable media coverage on cryptocurrencies
4. the over-supply of fiat currencies such as the USD
5. the use cases of cryptocurrencies continue to grow

If some or all of the events above begin to crystallise, then there is little doubt that Ripple, alongside many other cryptocurrencies, will receive a boost to its price in Australian dollars.

WHAT ELSE WILL MOVE XRP RIPPLE PRICE AUD?

INSTITUTIONAL RECOGNITION

Many see the fact that XRP being a centralised currency as a disadvantage. However, this is a double-edged sword and can become an advantage. This is because by being centralised, it is much easier for Ripple to interact with institutions, including government departments.

For example, the New York State Department of Financial Services (DFS) approved Ripple’s XRP token for custody by companies. However, the same department did not approve XRP for listing. The market reacted strongly to these news.

Also, in Q2 2020, over-the-counter (OTC) institutional sales of XRP jumped 1700% as compared to Q1 2020. This level of institutional adoption is unprecedented for an alt-coin.

Ripple, with its centralised team and backing, is able to communicate more effectively with these external institutions. This allows XRP to grow through partnerships and build more credentials. On the contrary, Bitcoin and many other decentralised cryptocurrencies will need to rely on the masses to preach its cause.

WHALE ALERT!

The movement of large holders of the cryptocurrency, also known as ‘whales’, will also significantly impact the price of XRP. This ‘whale affect’ can be more profound in the case of XRP, in comparison to Bitcoin and Ethereum. This is because XRP has a relatively smaller market capitalisation, therefore any movements by the whales can send shockwaves through the market! Further, some of the founders and senior executives are also whales in XRP. The size of their holdings, coupled with the information they possess, is a force to be reckoned with.

PERCEIVED AFFORDABILITY

XRP is often viewed as a more ‘affordable’ cryptocurrency among retail investors. This is somewhat illogical, given the circulating supply of XRP is a lot greater than that of Bitcoin or Ether. Further, cryptocurrencies are highly divisible, meaning that comparing 1 XRP vs 1 Bitcoin is not comparing apples with apples.

Having said the above, newcomers to the cryptocurrency scene typically look at the price of Bitcoin and think ‘wow that is too expensive, surely I have missed the boat’. On the other hand, when they observe the Ripple XRP Price AUD (trading less than one Australian dollar at the time of writing), they think that it is much more affordable.

This ‘perceived affordability’ is not new to the investment space. In fact, even Warren Buffet had to issue B-class shares for his company Berkshire Hathaway because the A-class shares are getting too prohibitively expensive.

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