The price of the sixth largest cryptocurrency in the market, XRP, has been on an uptrend since Monday, likely driven by Bitcoin’s price action and the overall bullish market trend. As a result, XRP’s market capitalization has also increased from $20 billion to a new yearly high of $25 billion, further solidifying its uptrend.
As of this writing, XRP is being traded at $0.470, coming close to reaching the $0.50 level after breaking out to the $0.490 mark. This represents a week-long gain of over 23%, which aligns with the upward trend of other major cryptocurrencies.
What Is Driving XRP’s Bullish Trend?
The XRP Ledger (XRPL), a decentralized blockchain technology supported by the fintech company Ripple, has played a key role in XRP’s current uptrend.
According to a recent study by the market research firm Messari, despite facing external pressure from US regulatory authorities over the potential classification of XRP as a security, the XRPL aims to provide a digital payment infrastructure not just for individuals but also for existing financial entities such as central banks.
As seen in the chart above, the adoption of the XRPL has increased significantly since February, which is believed to be contributing to the rise in XRP’s price. This wider adoption could be driving up demand for the token as more institutions and individuals are using the XRPL for cross-currency transactions and other use cases.
The surge in demand for XRP resulting from the XRPL’s increased adoption could play a crucial role in driving its price above the $0.50 level. As more buyers enter the market and compete for XRP’s limited supply, its price will likely increase.
Moreover, as awareness grows about XRPL’s potential to revolutionize the global financial system, investors may become more interested in investing in XRP, which could further fuel its price growth.
The research firm also emphasizes the significance of the XRPL’s Proof-of-Association (PoA) consensus algorithm in the broader financial system. This algorithm validates transactions and ensures the network’s security, making it a crucial component of the XRPL’s infrastructure.
The PoA consensus algorithm is particularly significant for the XRPL’s primary use case of enabling cross-currency transactions, where transaction speed is crucial to ensure timely and cost-efficient settlements.
Positive Outlook For XRP As Holdings Set To Increase And Boost Its Price
Messari’s report also notes that all nodes on the XRPL use the same free and open-source software, “rippled,” to validate and process transactions. Validators responsible for proposing and voting on transactions must hold a specific amount of XRP to participate in the consensus process.
Per the report, the increased participation of validators in the network ensures its security and efficiency. It drives up the demand for XRP as more validators acquire the token as collateral. The resulting increase in demand could lead to a rise in the price of XRP.
Additionally, the creation of new blocks, or “ledgers,” created every 3-5 seconds helps to ensure timely and efficient transaction processing on the XRPL, which both consensus and validation require 80% thresholds, being important for the XRPL’s primary use case of facilitating and settling cross-currency transactions.
Messari’s report highlights that the XRPL’s features include several functionalities, such as Issued Currencies (IOUs) that provide support for multiple assets, the capability of authorized trust lines that allow issuers to manage which wallets can interact with their tokens, and a central limit order book that enables low-liquidity IOUs trading.
Overall, XRP’s recent uptrend can be attributed to increasing institutional adoption, positive regulatory developments, and positive market sentiment, positioning XRP on the verge of achieving a milestone. If it breaches the $0.50 zone after losing the level in October 2022.
Image from Unsplash, chart from Tradingview