Episode Transcript
[00:00:02] Speaker A: Hello, welcome to the Money Adjustment. I'm your host Dr. Mark Kramer. I am a chiropractor who loves investing and trading. Are you interested in what's moving markets and your money?
[00:00:15] Speaker B: Great.
[00:00:15] Speaker A: Me too. Let's get started.
[00:00:19] Speaker B: So I recently wrote an article and posted it on Medium and then I shared that article on my various social media platforms. Currently I'm active on LinkedIn, X, Instagram and Threads is actually one of my bigger ones. But on Threads people just probably if they think of me at all, think of me as the Good morning guy. I was going to share this podcast a little bit later because it's Sunday and I really wasn't planning on doing a podcast today. But I haven't done one in a while and this one's been on the back burner and today it has become relevant. What I'm going to focus on today is Ripple xrp. Now that Bitcoin is trading at all time highs, traders and investors are looking for the next big thing.
Welcome to Alt Season Altseason is a colloquial term used in the cryptocurrency community to describe a period when alternative cryptocurrencies or altcoins experience significant price increases and gains in market capitalization, often outperforming Bitcoin. During an alt season, investors and traders tend to shift their focus from Bitcoin to other cryptocurrencies seeking higher returns and greater growth potential. This increased attention and investment can lead to a surge in prices and trading volumes for various altcoins. With over 2.4 million altcoins in existence, according to CoinMarketCap, which one do you choose to invest your hard earned dollars?
Last week my friend texted me loading up on XRP without a pulse on the market other than knowing it's alt season. I yoloed into a small position in XRP because of my friend. It's not what I recommend, but it happens sometimes. My friend and I have been talking about stocks and crypto for years so we are familiar with each other's trading styles. When my brother in law asked me what altcoin he should play, I said it's arbitrary as most of them will go up during alt season. It's like throwing darts when you know you can't miss. He said he knew but he was looking for a dart to throw. While I have some small positions in other altcoins, XRP is my most recent play. So let's talk XRP before going on. This is not investment advice. Do your due diligence before investing in anything. Now that you know where I'm coming from. Here's why you might consider throwing a dart at xrp. What is xrp? XRP is a fast, low cost, highly scalable cryptocurrency enabling real time global payments.
Key components include the Ripple protocol, validator nodes, and ledger. XRP uses the Ripple Protocol, a distributed consensus mechanism that enables fast and secure transactions. A network of validator nodes verifies transactions and ensures the ledger's integrity. The Ripple ledger is a distributed database that stores all transactions and account information.
A user initiates a transaction by sending XRP to another user's wallet. The validator nodes reach a consensus on the transaction, ensuring the ledger is updated correctly. The transaction is settled in real time with the recipient receiving the xrp. Unique features to XRP include fast settlement, low fees, and scalability. XRP transactions settle in real time, making it ideal for cross border payments. Transaction fees are extremely low, making XRP an attractive option for microtransactions. XRP's distributed consensus mechanism allows for high scalability, making it suitable for large scale payments. XRP's fast, low cost and highly scalable architecture makes it an attractive option for global payments and cross border transactions.
Similar to my breakdown of SoFi a few weeks ago, we'll break down the fundamentals and technicals of xrp. You may recall that fundamentals refer to essential factors that affect a company's stock price and performance. This includes revenue, earnings, price to earnings, dividends, return on equity, and valuation.
However, measuring the fundamentals of a cryptocurrency varies from stocks. Stocks are heavily regulated, while cryptocurrencies are largely unregulated. Stocks are valued using traditional methods, while cryptocurrencies require unique valuation approaches. Stocks have established financial histories, while cryptocurrencies have limited or no financial history.
Stock markets are generally more stable, while cryptocurrency markets are known for their high volatility.
Measuring the fundamentals of a cryptocurrency involves analyzing various metrics that provide insights into underlying value adoption and growth potential. Some key metrics to consider include financial, technological adoption, development, community, and regulatory. Let's focus on financial Metrics. These include 1 market capitalization, the total value of all outstanding coins 2 trading volume, the amount of coins traded within a given period and 3 liquidity, the ability to buy or sell coins quickly without significantly affecting the price. Using XRP as our example, XRP's market capitalization was $96.77 billion when I first drafted this episode. At the time of recording, which is now a couple days later, it went from $105.4 billion to today it broke out again and it's trading over $110 billion. So that's about a $15 billion move in market cap in just a couple days. XRP's market capitalization currently ranks fifth and actually today I think it surpassed Solana. So now it's fourth. That's how fast the space is moving. XRP's market capitalization currently ranks fourth among all cryptocurrencies. It's fluctuating between fourth and fifth. Regarding trading volume, XRP's 24 hour trading volume is approximately 5 to 11 billion. That was when I did the research. It could be more at this time, which ranks high compared to other cryptocurrencies. The top five cryptocurrencies by trading volume are Bitcoin, Ethereum, Tether, Solana and xrp. And now it seems like XRP and Solana are in a race for that number four spot. Remember that trading volume can fluctuate rapidly, so these rankings may change over time as they do as they did today. Regarding liquidity, XRP is considered a highly liquid cryptocurrency. Liquidity can be measured in several ways. Trading volume, market capitalization, order book depth and bid ask spread. The bid ask spread for XRP is relatively low, indicating high liquidity overall. XRP's high liquidity makes it an attractive option for traders and investors as it allows for easy entry and exit from positions.
One metric that stood out to me is social media presence, the size and engagement of the project's social media community. XRP has a significant social media presence and a large and active community, and that was definitely exhibited today.
Sunday, December 1, 2024 According to Crypto Rank, XRP social media ranking is 6. That may have changed today. It could be higher, indicating a substantial following and engagement across various platforms. By analyzing these metrics, you can better understand a cryptocurrency's fundamentals and make more informed investment decisions. Before taking a position, consider both sides the bull and the Bear case. Bulls are enthusiastic about an asset and tout why they think it is undervalued and will likely increase in price. The Opposition the bears will tell you why the asset is overvalued and will likely go down in price. As a trader investor, you have to choose a position.
Quick note. There are strategies where you can be wrong on price and direction while still making money. That's outside of the scope of this episode, but strategies like that do exist and typically involve derivatives of the underlying asset like options.
So what is The Bull Case for XRP the bull case for XRP is incredibly strong and driven by several factors. Firstly, the ongoing legal battles with the SEC show signs of resolution which could significantly boost XRP's price. Additionally, the growing interest in XRP's use case is a fast, low cost solution for cross border payments is attracting the attention of large financial institutions and investors alike. Whale accumulation is also a significant driver of the bull case, with large scale investors accumulating significant amounts of XRP. In fact, XRP whales have accumulated a staggering 4.5 million tokens valued at approximately $526 million in just one week alone.
I can't validate that number at this point because it could be much higher given the recent action. This level of accumulation has not been seen in nearly three years, signaling a strong vote of confidence from institutional investors and high net worth individuals. Furthermore, analysts predict that XRP could reach prices between 8 and $30 in the coming months or years, driven by growing investor confidence and increasing demand for Ripple's blockchain solutions.
Now a quick side note here we are in the early stages of the altcoin season and my experience in the crypto space, which is relatively big or small depending on how long you've been in the space. I've been actively engaged in the space for about four years. Before that I had been following Bitcoin since its inception in 2008, but I did not become an active participant, meaning I didn't take a position in bitcoin until 2020 and that's when I really understood it and that was about the $12,000 price level. So the reason I brought that up is because I said coming months or years. More than likely this current cycle is going to last months and not years. I don't know what the exact number is, but let's just say it's like 96% of people do not make money in crypto because it's so volatile and it whipsaws. You have to be strategic in terms of play, cryptocurrency and like any other investment, you want to not be too greedy. If you actually want to make some money, you want to take some profits at some point. That being said, these are speculations here. With XRP's strong use case, growing adoption and increasing investor confidence, the bull case for XRP is certainly compelling. Key drivers of the bull case include regulatory clarity, growing adoption, whale accumulation, and increasing investor confidence. Resolution of ongoing legal battles with the SEC could provide a significant boost to XRP's price. Increasing interest in XRP's use case as a fast low cost solution for cross border payments is attracting large financial institutions and investors. Large scale investors are accumulating significant amounts of XRP, signaling a strong vote of confidence. Growing confidence in XRP's potential is driving price appreciation and adoption. Now let's look at the bear case for xrp. The bear case for XRP is centered around several key concerns. Firstly, the ongoing court case between Ripple Labs and the US SEC is a major overhang and a negative outcome could significantly impact XRP's price.
That said, the concern seems less likely because the incoming administration favors the cryptocurrency asset class more than the current administration.
Another concern is XRP's lack of strong buying interest at higher price levels, which has led to prolonged range bound action between $1.20. Now that's this is already outdated because we've just broken over $2 at the time of this recording. I hope that maybe $2 will be the floor for the upcoming couple months, floor being the level of support. But this is the crypto space, so it's like the wild wild west. You never know. So the concern about a lack of strong buying interest at higher price levels may no longer be an issue at this point. I suppose on some level it's an issue in any class because you're always skeptical as you're buying at higher prices. You're banking on the facts or betting on the fact, or betting on the idea that someone else is going to buy and see the value you see at a higher price. If even the lower price targets discussed in the bull case are correct, the targets for anywhere from 8 to $30. That gives us about a 4 to 20x from here. Even though XRP has ran over 300% in one month, there's still arguably a lot of upside here. Which sounds crazy if you weren't talking about cryptocurrency where this is somewhat the norm. Additionally, the bear case emphasizes that even if XRP's adoption increases, its price may not necessarily follow. This is because XRP supply is relatively high, which could put downward pressure on its price. This is one of the most relevant bear cases against XRP in my opinion. As I mentioned earlier in this podcast, I am not necessarily, I am not actually, I shouldn't say necessarily. I'm not an authority in the crypto space. I am a weekend warrior crypto trader. Like maybe many of you are listening. And if you are actively engaged in the space, you're getting a perspective of a retail investor that sees the adoption of the asset class. But My main trading and investing is still involves traditional assets like stocks. That being said, this is what I've come to learn. XRP supply is managed through a unique mechanism. The total supply of XRP is capped at 100 billion units. The founders Jed McCaleb and Chris Larson hold a significant portion of the supply. XRP manages its supply through escrow, scheduled releases, validator nodes and supply reduction.
1. Escrow ripple holds a significant portion of the supply and escrow accounts. These accounts are designated to release a fixed amount of XRP at predetermined intervals. 2. Scheduled releases the escrow accounts release 1 billion XRP every month, which helps to maintain a consistent supply of XRP in the market.
3. The Validator Nodes XRP's consensus algorithm, the Ripple protocol, relies on a network of validator nodes to validate transactions. These nodes are incentivized to participate in the network through a reward system which involves the distribution of a small amount of XRP for supply reduction. XRP supply is reduced through a process called burning where a small amount of XRP is permanently removed from the supply. This helps to maintain the value of XRP by reducing the circulating supply. Overall, XRP supply's management mechanism is designed to maintain a stable and predictable supply of XRP which helps support the cryptocurrency, stability and value of the key Bearish Arguments I do believe that a relatively high supply of XRP could put downward pressure on its price. Now let's get technical. Looking at the technicals, XRP is about to break above its all time high in May of 2021 at $1.96. Now when I originally wrote this, it was trading below $1.90. At the time of this recording it reached up to at least $2.15. So these are big moves happening. This market moves fast and maybe even by the time you're listening to this, the whole market's crashed. Now I'm totally kidding. I doubt that's going to happen during alt season. I do think we have at least a few more months of some upside here. So I think what I'm telling you right now is going to have some relevance. Even if you don't trade XRP and you're trading other altcoins. Just understanding the fundamentals and the technicals and how people are trading this asset class you might find helpful. If the current alt season follows a similar pattern to the last one, there is a chance XRP could double or triple from here going into 2025 you might set a price target of $4. That's a double from its current price level. If you're conservative, a more aggressive target would be $8. I don't know if I have the stomach to hold out for more aggressive targets like $10 to $30.
Price targets are highly speculative and the fundamentals of crypto are not like those of the stock market. In conclusion, XRP presents a compelling investment opportunity driven by its strong fundamentals in growing adoption. While the bear case raises valid concerns, I believe the bull case is more convincing, at least for the next few months. With its unique supply management mechanism and growing investor confidence, XRP has the potential to reach new heights. Remember, price targets are highly speculative, but a conservative target of $4 or an aggressive target of $8r possible outcomes. Ultimately, investors should conduct their own research and consider both the bull and bear cases before making investment decisions. I hope you found this episode helpful and I look forward to doing more analysis podcasts regarding different asset classes. This is the first one I've done in a cryptocurrency, and because XRP just broke out, I felt like it was a good time to get this podcast out to you. Thank you all for listening and we'll see you on the next one.
[00:20:29] Speaker A: Thank you for listening to this episode of the Money Adjustment. If you found value like comment and subscribe, follow me on X Mark Kramer I look forward to being with you.
[00:20:42] Speaker B: On the next episode.
[00:20:44] Speaker A: Until then, stay healthy and wealthy.
