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A recent commentary by Crypto Tank, an XRP community figure, has brought the conversation around XRP’s potential surge to $1,000 back into focus.
According to Crypto Tank, those who believe such a price point is unrealistic may not fully grasp the vast utility XRP could offer, especially in the global financial system.
The Role of SWIFT in Global Finance
To understand how XRP could reach such unprecedented heights, it is important to examine the current global financial systems and how they could benefit from adopting XRP.
SWIFT, the Society for Worldwide Interbank Financial Telecommunication, is a cornerstone of cross-border transactions, handling between $5-7 trillion in daily messaging volume.
Yet, SWIFT’s system only facilitates the messaging aspect of transactions, meaning actual settlement happens through additional processes such as the TARGET2 system in the European Union or FEDWIRE in the United States.
Notably, SWIFT’s current system faces challenges in terms of both speed and cost. Each messaging transaction can cost between $20 to $50, and settlements can take days.
By integrating RippleNet, the entire transaction process—including both messaging and settlement—could be handled in mere seconds at a fraction of the cost. This shift could save banks hundreds of billions in fees annually.
Why XRP Could Be Poised for High Demand
Crypto Tank argues that as financial institutions realize the significant cost savings XRP could provide, there will be a massive incentive for adoption.
If just 10% of SWIFT’s current daily volume were settled using XRP, that would already involve approximately $500 billion in transactions per day.
Currently the cost of a Swift messaging transaction is $20-50 versus pennies with XRP. So banks will be greatly incentivised to adopt RippleNet using XRP to save hundreds of billions in fees per year. Now lets say banks settle just 10% of transactions to start with XRP…
— CryptoTank (@Tank2033js) September 28, 2024
In addition to SWIFT, large financial institutions like JPMorgan, Bank of America, and SBI manage daily volumes of trillions, which further underscores XRP’s potential if it were to capture even a fraction of these transactions.
For banks to use XRP effectively, a deep liquidity pool is required to ensure smooth transactions. Liquidity pools on the XRP Ledger (XRPL) could enable frictionless transfers between digital tokens, central bank digital currencies (CBDCs), and various fiat currencies.
If these pools hold enough liquidity, they could support the settlement of large-scale transactions. To move $500 billion in value through XRP, for example, the liquidity pool would need to hold approximately $1 trillion in assets.
The Path to $1,000 XRP
The price of XRP is tied to its role in facilitating high-value transactions on the XRPL. Crypto Tank explains that the value of XRP must rise in proportion to the volume it supports on the ledger.
The circulating supply of XRP currently stands at around 56 billion tokens, but he believes this figure is somewhat misleading. Ripple holds a significant portion of these tokens—about 39 billion—in escrow, and many XRP tokens are held by retail investors, whales, and financial institutions.
Given the limited availability of XRP for liquidity pools, the actual circulating supply used to facilitate transactions could be much lower than reported. Even if just 10 billion XRP were allocated to liquidity pools, the value of XRP would need to be around $100 per token to support a $1 trillion liquidity pool.
This figure could rise even higher as more financial institutions adopt XRP, potentially driving the price towards the much-discussed $1,000 mark.