The price of the sixth largest cryptocurrency on the market, XRP, has been in an uptrend since Monday, likely due to Bitcoin’s price action and the overall bullish market trend. As a result, XRP’s market cap has also surged from $20 billion to a fresh yearly high of $25 billion, further solidifying the uptrend.
As of this writing, XRP is trading at $0.470 and is nearing the $0.50 level after touching the $0.490 level. This equates to a one-week gain of over 23%, in line with the uptrend of other major cryptocurrencies.
What is driving XRP’s uptrend?
The XRP Ledger (XRPL), a decentralized blockchain technology backed by fintech company Ripple, has played a key role in XRP’s current uptrend.
According to a recent learn by market research firm Messari, despite external pressure from US regulators over the potential classification of XRP as a security, the XRPL aims to provide a digital payments infrastructure not only for individuals but also for existing financial institutions such as central banks.
The total number of XRPL accounts is increasing. Source: Messari
As can be seen in the chart above, XRPL adoption has increased significantly since February, which is believed to be contributing to the rise in XRP price. This broader adoption could fuel demand for the token as more institutions and individuals use the XRPL for cross-currency transactions and other use cases.
The increase in demand for XRP stemming from the growing acceptance of XRPL could play a crucial role in propelling the price above the $0.50 level. As more buyers enter the market and compete for the limited supply of XRP, the price is likely to increase.
Additionally, as awareness of XRPL’s potential to revolutionize the global financial system grows, investors may become more interested in investing in XRP, which could further fuel the price surge.
The research firm also emphasizes the importance of XRPL’s Proof-of-Association (PoA) consensus algorithm in the broader financial system. This algorithm validates transactions and ensures the security of the network, making it a crucial component of XRPL’s infrastructure.
The PoA consensus algorithm is particularly important for XRPL’s primary use case of facilitating cross-currency transactions, where transaction speed is critical to ensure timely and cost-effective settlements.
Positive outlook for XRP as stocks will increase and push the price higher
Messari’s report also notes that all nodes on the XRPL use the same free and open-source software, “rippled,” to validate and process transactions. Validators, who are responsible for proposing and voting transactions, must hold a certain amount of XRP in order to participate in the consensus process.
According to the report, increased participation of validators in the network ensures its security and efficiency. It is driving demand for XRP higher as more validators acquire the token as collateral. The resulting increased demand could lead to an increase in the price of XRP.
Additionally, the creation of new blocks or “ledgers” created every 3-5 seconds helps ensure timely and efficient transaction processing on the XRPL that require both consensus and validation of 80%, which is for the primary use case of XRPL important is the facilitation and settlement of cross-currency transactions.
Messari’s report highlights that XRPL’s features include multiple functionalities such as: B. Currencies Issued (IOUs) that provide support for multiple assets, the ability of authorized trust lines that allow issuers to manage which wallets can interact with their tokens, and a central limit order book that allows trading of low-liquidity promissory notes.
Overall, XRP’s recent uptrend is driven by increasing institutional acceptance, positive regulatory developments, and positive market sentiment, putting XRP on the verge of hitting a milestone. If it breaks the $0.50 zone after losing the October 2022 level.
XRP uptrend on the 1-day chart. Source: XRPUSDT on TradingView.com
XRP uptrend on the 1-day chart. Source: XRPUSDT on TradingView.comImage by Unsplash, chart by Tradingview
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