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A recent reduction in the XRP Ledger (XRPL) reserve fee has triggered speculation about a potential surge in the value of XRP.
Wall Street analyst and financial author Linda P. Jones recently discussed some possible implications of this change. In her commentary, she speculated that XRP could see a more massive price growth soon.
The reserve fee, which determines how much XRP must be held in a wallet as a minimum balance, was recently lowered to 1 XRP from its previous requirement of 10 XRP.
Notably, this fee was originally 20 XRP but has seen a gradual reduction over time. Jones noted that past reductions in the reserve requirement often preceded notable increases in XRP’s price.
Context of the XRP Reserve Fee Reduction
The decision to lower the reserve fee came up on Dec. 2, following concerns from the XRP community about the previous figure of 10 XRP. Pundits argued that the higher reserve was discouraging adoption, as it required users to lock up a substantial amount of funds to open new accounts.
Community leaders, including Wietse Wind, the founder of Xaman (Xumm) developer XRPL Labs, advocated for a reduction in the reserve fee. Wind confirmed in October that he had voted for a 90% reduction to 1 XRP.
Notably, the 10 XRP reserve fee became especially burdensome as XRP’s value surged in recent weeks. When XRP was trading at $0.50, the 10 XRP amounted to $5. However, as the asset’s price climbed to $2.50, the same requirement grew to $25, raising fresh concerns.
Interestingly, the fee dropped to 1 XRP yesterday. At the current price of $2.60, the new reserve fee is equivalent to $2.60, making it far more accessible for new users. The change looks to bolster greater adoption by reducing the financial commitment necessary to start using XRP.
XRP Price Growth Speculation
Meanwhile, Jones pointed out in her recent commentary that reserve fee reductions have historically coincided with or preceded periods of price growth for XRP. According to her, these price movements have always pushed the cost of the reserve to $4-$16 after each adjustment.
Every wallet that holds XRP has a reserve requirement. It used to be 20 XRP, then it was reduced to 10 XRP. Dec. 2nd it was reduced to 1 XRP. The reserve requirement has usually dropped ahead of an #XRP price increase and has averaged around $4 to $16. Does a drop to 1 XRP imply… pic.twitter.com/h7KMY1jVk3
— Linda P. Jones (@LindaPJones) December 3, 2024
For instance, when the reserve fee was lowered from 20 XRP to 10 XRP, the price saw upward momentum shortly after, with XRP hovering around $0.50 at some point. This brought the cost of the reserve to $5. She argued that the latest reduction could signal a similar trajectory.
Based on this historical data, she speculated that XRP price might soon grow to push the cost of the reserve fee (currently at $2.6) to $4-$16. With the fee now at 1 XRP, this could translate to a price of $4 to $16 for XRP. Notably, as XRP currently trades for $2.6, it would need to rally 54%-515% to reach $4-$16.