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In continuation of an XRP-focused discussion that began in March, Ripple CTO David Schwartz has provided intriguing insights into the correlation between XRP and Stellar (XLM).
Schwartz openly admitted, "I have no idea what factors drive the price of XRP." This statement might seem surprising coming from one of the key architects of XRP Ledger, but it might highlight various market factors at play, influencing XRP price action.
I have no idea what factors drive the price of XRP. The only real objective data point I have is that XRP tracks the price and market cap of XLM incredibly well over all time frames. pic.twitter.com/Ng2hkSA2wP
— David "JoelKatz" Schwartz (@JoelKatz) August 30, 2024
The Ripple CTO went on to make a major observation: "The only real objective data point I have is that XRP tracks the price and market cap of XLM incredibly well over all time frames."
This remark suggests that despite the complexity at play influencing price action, XRP and XLM share a closely linked trajectory. XRP and XLM share similar origins, as XLM was created by Jed McCaleb, a co-founder of Ripple who later parted ways to start Stellar. Both tokens are intended to facilitate cross-border payments, though they cater to different markets and use cases.
The correlation highlighted by Schwartz could imply that market forces affecting one of these tokens often influence the other. However, the exact reasons for this correlation remain speculative, as Schwartz himself noted the lack of clarity on the precise drivers behind XRP's price.
XRP price action
At the time of writing, XRP, the seventh largest cryptocurrency by market cap, was up 1.31% in the last 24 hours to $0.5677 as several cryptocurrencies in the market traded in losses.
Following choppy sideways trading action in the week, XRP rebounded from lows of $0.546 in yesterday's trading session.
If XRP sustains its current rebound and rises above $0.58, it might suggest that bulls are firmly defending the level. XRP may then rise to $0.64, with buyers needing to cross this hurdle before moving on to $0.74.
In the event of a downturn, XRP may target the daily SMA 200 at $0.551, while bears may attempt to strengthen their position further by dragging the XRP price below the $0.54 support. If they succeed, XRP may fall to $0.46, extending its range trading for some time.