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Ripple’s chief technology officer, David Schwartz, has cautioned investors about potential price volatility for $RLUSD, Ripple’s U.S. dollar-pegged stablecoin, as it prepares for launch.
In a December 15 post on X, Schwartz addressed concerns about $RLUSD’s market debut, acknowledging the possibility of initial supply shortages that could drive its price above its intended $1 parity to the U.S. dollar.
An announcement for when $RLUSD will be released to the market has yet to be provided. Ripple did not immediately respond to a request for comment.
In August, Ripple announced that it had started testing its new stablecoin on $XRP Ledger (XRPL) and Ethereum mainnet. Ripple plans to utilize $RLUSD to provide cross-border payment solutions to its global users.
Schwartz noted some pre-market bids valuing $RLUSD as high as $1,244, attributing this to excitement from buyers seeking to claim “the honor” of purchasing the first units of the stablecoin.
“There actually is someone willing to pay $1,200/$RLUSD for a tiny fraction of one $RLUSD,” Schwartz wrote, referencing a Ripple wallet listing.
However, he said such inflated valuations would be short-lived, assuring that “the price will come back to very close to $1 as soon as supply stabilizes. If it doesn’t, something is very seriously wrong.”
Schwartz described the market forces at play, noting the role of arbitragers in stabilizing $RLUSD’s price. Arbitrages are expected to quickly normalize $RLUSD’s value by selling at inflated prices and buying at or below $1, straightening up supply and demand.
“Please don’t FOMO into a stablecoin! This is not an opportunity to get rich,” Schwartz added.
The warning comes as Ripple prepares to roll out $RLUSD following its approval by the New York Department of Financial Services on December 11.
Schwartz concluded by reminding investors of a stablecoin’s main purpose: to have a “stable price.” While short-term price shifts are possible during launch, the stablecoin is designed to maintain its $1 peg.
Meanwhile, $XRP surged to a seven-year high earlier this month, climbing to $2.74—the highest price since January 2018—marking a fivefold increase over the past 30 days.
$XRP is down nearly 1% over the past day, trading at $2.41, according to Coingecko data.
Edited by Sebastian Sinclair