- An increasing number of people have been spreading the narrative that XRP could get close to Bitcoin’s current price, or around $100K per token.
- An economist explained how supply, demand, and liquidity intertwine with the valuation of currencies to dispel these astronomical forecasts.
Ripple is undoubtedly catapulting the adoption of XRP and its underlying technology through various partnerships and increasing adoption in financial institutions. After the first week of October, the digital asset has been struggling below the $3 line. However, some crypto community members remain convinced about the possibility of the price of XRP getting close to Bitcoin’s (BTC) value at $100K per token in the future.
XRP Based on Supply and Demand Dynamics
Several members of the XRP Army (XRP’s dedicated community) believe that market cap does not limit XRP’s value. They say that its high utility, particularly in cross-border payment settlement, ignores this constraint. With that, a former City of London fund manager claimed it could reach $15,000 per token.
However, an economist and former forex (foreign exchange) analyst, the pseudonymous Moonchaser, believes market cap plays a vital role in every asset’s valuation. Hence, considering the 60 billion circulating supply of XRP to date, forecasts of the token reaching $100K per unit are unrealistic.
To keep expectations grounded, the analyst explained that supply, demand, and liquidity drive assets and currencies. This dispels the notion that “XRP has no market cap because it is a currency.”
Moonchaser highlighted that currency trading and valuation follow a standard economic valuation. For example, the US dollar’s value moves depending on the total monetary base (M1, M2). Supply, demand, and liquidity dynamics govern its pricing in forex. XRP, framed as a currency, adheres to the same rules. This also applies to all assets, whether in fiat, a commodity, or a digital asset.
The economist emphasized that XRP moves on price discovery based on the abovementioned factors because being a currency does not mean being a capless asset. Even at XRP’s prevailing circulating supply, the $100K price would bring the asset’s overall valuation to $6 quadrillion. This further inflates when factoring in its 100 billion max token supply. This argument is too problematic because it would mean surpassing the 2025 global gross domestic product (GDP) of $117 trillion.
Utility indeed drives demand, but the high supply of XRP makes the $100K per-unit price economically improbable.
But Bitcoin Has Already Surpassed $126K
Bitcoin has significantly deviated from its original peer-to-peer electronic cash system in favor of a “digital gold narrative,” which effectively turns it into a store of wealth like the precious metal gold. On the other hand, its creators primarily designed XRP for cross-border payments. These contrasting narratives clearly establish a distinction in their fundamental value proposition.
Given these facts, the comparison between Bitcoin and XRP is like comparing apples to oranges. BTC’s hard cap at 21 million coins guarantees its scarcity as opposed to XRP’s 100 billion max cap. This is compounded by BTC’s first-mover advantage, which gives it superiority over Ethereum (ETH), BNB, XRP, and other altcoins during discussions.
Applying the basic economic principle of the law of supply and demand puts us into the market reality that XRP will not flip or even get close to the current price of Bitcoin.
Final Thoughts
Wrapping things up, investors must not invest in XRP based on the fantasy of price parity with Bitcoin. Instead, one must bear in mind its fundamental strengths based on the XRP Ledger and Ripple’s technology and its verifiable, increasing utility in the global financial system.
Disclaimer: The facts presented in this article are only for informational purposes. They do not serve as financial advice or product recommendations from the author or the Blockzeit team.
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