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The debate over the impact of the Ripple On-Demand Liquidity (ODL) product on the price of XRP has been a contentious topic.
Mickle, a notable wealth advisor and market commentator, recently took to social media to dispel what he considers to be “persistent misinformation.”
According to Mickle, the notion that Ripple’s ODL product does not affect XRP’s price has flaws. His argument suggests that ODL plays a significant role in driving up the value of XRP, contrary to claims that the buy and sell dynamics involved in ODL transactions cancel each other out.
The Role of ODL in XRP Price
Mickle emphasized that while some critics argue that the buy and sell transactions in ODL are neutral to XRP’s price, they overlook a crucial aspect. According to him, this is the necessity for market makers to hold reserves of XRP.
Market makers, who facilitate these transactions, must stockpile XRP to ensure they can meet demand. As ODL transactions increase globally, the demand for XRP among market makers also rises, leading to higher accumulation of the token. Mickle argues that this creates a supply constraint, which naturally drives up the price of XRP.
He further contends that the expansion of ODL globally will necessitate even more market makers to hold XRP in their reserves. This increased demand, combined with the finite supply of XRP, should logically result in an upward pressure on its price.
Mickle’s view challenges the existing belief that ODL’s operational structure is inherently price-neutral. However, Ripple and some of its executives have confirmed that ODL transactions are indeed demand neutral.
A Common Rebuttal
While Mickle is optimistic about the impact of ODL on XRP’s price, not everyone in the XRP community agrees. Eri, a well-known figure in the XRP community, pointed out in a reply that Ripple itself has indicated in court documents that ODL transactions are largely demand-neutral.
Ripple Reply in SEC Court Doc. ODL is price neutral. Bob Way left Ripple before ODL flow was changed to a Ripple managed wallet. pic.twitter.com/8ho28qGDW5
— 🌸Crypto Eri 🪝Carpe Diem (@sentosumosaba) August 24, 2024
Ripple’s disclosure, as cited by Eri, suggests that ODL transactions, which involve the simultaneous purchase and sale of XRP, do not significantly affect its price.
According to the court documents, this is because each ODL transaction involves the purchase and sale of the same amount of XRP within a short timeframe, effectively neutralizing any impact on the token’s market value.
Eri further highlighted that Bob Way, a former Ripple Product Manager, who Mickle referenced in his argument, left Ripple before significant changes were made to ODL’s operational flow. According to Eri, Ripple’s current system for managing ODL transactions differs from the setup during Bob Way’s tenure.
Regulatory Environment
Meanwhile, Mickle also spotlighted how regulatory developments could impact XRP. He noted that recent changes in global liquidity trends, spurred by potential interest rate cuts from the Federal Reserve, could lead to a more bullish environment for cryptocurrencies.
This anticipated influx of liquidity, combined with favorable regulatory developments, could set the stage for a significant bull run in the cryptocurrency market, with XRP positioned to benefit.
Mickle also discussed the legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC). He highlighted recent developments, including a court ruling in the Kraken lawsuit, which could impact the SEC’s strategy moving forward.
According to Mickle, the SEC might be more cautious about appealing the Ripple case to avoid setting a precedent that could weaken its position in other ongoing cases.