[Strategy] Ripple Mania: How Big Can the Bankers’ Cryptocurrency Get?

 For a brief period of time, Ripple  overtook Ethereum to become the second largest cryptocurrency in the  global market behind bitcoin, with a $72 billion market valuation, on  December 29. 

Ripple Mania in South Korea

Since then, the market cap of Ripple  has fallen slightly from $72 billion to $70.3 billion, allowing Ethereum  to regain its position as the second largest cryptocurrency. It is the second time this year that a  cryptocurrency has overtaken Ethereum in market valuation. In November,  Bitcoin Cash briefly surpassed the market valuation of Ethereum, during  a period in which the SegWit2x hard fork proposal was rejected by the  market and the majority of SegWIt2x supporters moved to Bitcoin Cash. At the time, Buterin wrote:  

Over the past few weeks, CCN reported  on several occasions that the demand for Ripple from South Korea and  Japan are fueling its price growth. At the time of reporting, the price  of Ripple in South Korea remains above $2, more than 10 percent higher  than the global average price. The demand for Ripple has surged in  the two countries because of the partnership between Japanese banks led  by SBI Ripple Asia and South Korean financial conglomerates to integrate  Ripple’s blockchain-based technologies by January 2018. Ripple Labs and  the developers of the Ripple network expected many billions of dollars  to be processed on the RIpple network on a regular basis. 

Price of cryptocurrencies on Korbit

As Korbit founder and CEO Tony Lyu  told Nathaniel Poppers of The New York Times, once investors in the  South Korean market are optimistic about a certain asset and its value  continues to increase, every trader in the market moves towards that  particular asset. The South Korean cryptocurrency exchange is very  strongly affected by FOMO or fear of missing out. 

“Word just spreads really  fast in Korea. Once people are invested, they want everyone else to  join the party. There’s been this huge, almost a community movement  around this,” said Lyu.

Last month, the South Korean market  rallied behind Bitcoin Cash, pushing the price of BCH in the local  market to $3,700. This month, Ripple has been the focal point of the  portfolios of South Korean investors. Peter Brandt, an experienced and highly respected trader, stated that any investment or trade by FOMO is discouraged and it is an emotion which investors should not reflect on their trades. 

“In my opinion, FOMO is  one of the absolute worst emotions a trader can possess. I cannot count  the number of traders I know who tapped out over FOMO. Learn to resist  it or it will bury you,” said Brandt. “It’s my contention that many  cryptomaniacs misunderstand FOMO. Markets thrust higher not because of  buying from FOMO, but markets sense those with FOMO are missing out.  When mass FOMO finally throws in the towel to buy its a top of some  scale.”

Also, in a minor market like South  Korea, cryptocurrency investors often look for reaffirmations by  prominent traders or institutions to justify their trades. For local  traders, the wide adoption of RIpple by leading banks has been a go  signal for investment. 

Is Ripple Sustainable?

Earlier this year, Ripple processed  $180 million for Swedish bank SEB. If Ripple can process many billions  of dollars on a daily basis on behalf of its partner banks, the high  market cap of Ripple can be justified. However, the market cap and price of  Ripple should not be justified by TAM, or total addressable market, but  rather with actual transaction volumes and user activity. 

Featured image from Shutterstock. 

Source: ccn.com

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