thecryptobasic.com
A market pundit has recently presented how the forthcoming Ripple stablecoin $RLUSD could help boost $XRP prices.
Ripple’s stablecoin, $RLUSD, is poised for launch before the end of this month, pending regulatory approval from New York authorities. While reports suggested a launch three days back, Ripple has debunked these, confirming that it is still awaiting approval.
Meanwhile, speculation around $RLUSD has triggered discussions about its potential impact on $XRP, with Lakeita Powell, a market observer, recently presenting theories about how this development could influence its price trajectory.
$RLUSD as a Stable Medium for Transactions
The commentary noted that a key advantage of $RLUSD lies in its ability to minimize volatility during $XRP transactions. Traditionally, institutions and banks use fiat currencies, like the US Dollar, to acquire $XRP.
These transactions can be subject to currency fluctuations, which add complexity and risk. However, by using $RLUSD as a stable intermediary, institutions can execute large-scale purchases of $XRP without worrying about sudden value shifts.
Boosting $XRP Liquidity and Clearing Order Books
The theory then identified $RLUSD’s potential to enhance liquidity in the $XRP market. Large-scale $XRP purchases using $RLUSD could clear significant portions of exchange order books.
For instance, if a bank deposits $1 billion in $RLUSD and uses it to buy $XRP, the stablecoin could sequentially exhaust sell orders at lower price levels. This process moves the price upward as lower-priced $XRP becomes unavailable, driving the market toward higher price points.
Interestingly, this scenario could create a rapid escalation in $XRP prices, particularly if institutions place sizable buy orders. The reduced availability of cheaper $XRP increases demand, establishing higher baseline prices in the order book.
As $XRP prices climb, the utility and demand for the asset remain intact due to its inherent benefits, including speed and cost efficiency for international payments.
Notably, $RLUSD would facilitate these transactions, providing a stable mechanism to support ongoing $XRP adoption. This could encourage more institutions to utilize $XRP, supporting demand and price appreciation.
Example Scenario
In the commentary, the pundit presented a particular scenario that demonstrates this theory. Interestingly, in this scenario, a bank deposits $1 billion into $RLUSD, holding it in an exchange or a Ripple-supported wallet.
After this, the bank then uses $RLUSD to purchase $XRP. Starting with lower-priced orders, it clears a significant portion of the order book, driving the price from $0.50 to $5 or more. Nonetheless, now that $XRP trades for $2.4, these buys could start above $2 and increase from there.
Once $XRP reaches higher price levels, these prices set a new baseline, as the lower-priced supply is exhausted. Further, the bank then leverages $XRP for international payments. $RLUSD remains the stable medium for these activities, as it ensures the system’s efficiency.