For most of 2020, Bitcoin and Ether have been basking in the glow of healthy gains. XRP? Not so much.
Between January and October, BTC ballooned by 90%—and ETH performed even better than that, clocking impressive gains of 196%. XRP, we hear you ask? Er, 25%.
But it seems that XRP was just biding its time. Out of nowhere, the altcoin surged by 178% from $0.28 to highs of $0.78… taking many crypto pundits by surprise.
The bump enabled XRP to retain the coveted No. 3 slot of the world’s biggest cryptocurrencies—a few months after it was relegated to fourth place by the Tether stablecoin.
Now, the altcoin’s market cap is $12.5 billion higher than USDT’s.
But here’s the question on everybody’s lips: What caused the surge, and is it here to last?
Why did XRP rally?
It’s undoubtable that the blockbuster performance was at least partially driven by the recent gains enjoyed by the likes of BTC and ETH… albeit delayed.
But there are other factors to take into account, too. Whereas Ripple has sold off big chunks of its XRP treasure chest to raise capital in the past, there was a change of tack in Q3. For the first time, the payments company announced that it was actually buying up the altcoin in order to encourage a healthy market. Just like buybacks can boost the stock of publicly listed companies, it’s seems likely this strategy helped deliver uplift for XRP.
Then there’s the forthcoming airdrop of 45 billion spark tokens by Flare Network. Scheduled for Dec. 12, the one-to-one distribution of the smart contract platform’s governance tokens (SPARK) to non-Ripple Labs XRP holders has sparked a lot of interest. Major exchanges including Binance, Bitstamp, and Bitthumb are supporting the airdrop.
Elsewhere, there has also been a flurry of excitement surrounding what Ripple has in the pipeline—including products that could potentially unlock new use cases for XRP.
Back in early November, Ripple Labs quietly filed a patent for Paystring, a product that was described as providing “monetary services for receiving and disbursing remittances and monetary gifts in fiat currencies and virtual currencies.”
The company has been tight-lipped about the story behind the trademark, but it does hint that it has plans to shake up the remittance sector at a time when skyhigh fees eat into the money that migrant workers send home to their families. XRP trading volumes could end up being boosted substantially if the cryptocurrency ends up being used as a bridge for that fiat.
Although XRP enthusiasts will undoubtedly be jumping for joy after the recent surge, the question now is whether or not these triple-digit gains are sustainable in the long run. What goes up can go down very quickly, especially considering that levels of support haven’t been established along the way.
But for those who have a firm belief that the crypto markets are cyclical, there’s hope that this could be the start of XRP’s journey back to all-time highs at $3.84.
One trader, Credible Crypto, wrote on Twitter that—in the short term—XRP might take a breather as it now faces a key resistance level in its pairing with BTC.
Referring to XRP’s all time high, he added: “Consider that in prior bull runs most alts have broken their prior ATH within 2 months after $BTC breaks it’s prior ATH. Bitcoin will break its ATH soon. So ask yourself, would you take profits on $XRP now knowing that it will probably be over $3.50 in a few months? HODL.”