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A review of the bank-backed crypto and its challenges ahead
Cryptocurrency is once again a buzzword in the financial markets on the back of some heavy selloffs in equities and FX globally. Investors have been seeking shelters from the escalating US-China trade war, a potential currency war, increasingly aggressive easing from central banks, and geopolitical tensions. In our previous article “Bitcoin and a Chaotic World”, we’ve seen how bitcoin reacted to crises in the past and it could act as a new kind of safe-haven asset.
However, with the hype over the crypto markets, XRP has been constantly lagging behind other major cryptocurrencies.
In a broader sense, more big names are jumping onto the crypto bandwagon, however, some say that could jeopardize the outlook for XRP.
The following chart compares the YTD performances of XRP with BTC, and XRP didn’t live up to the hype even with the broader bullish sentiment in June. As of August 6th, 2019, BTC surged over 200% this year while XRP gave up more than 12% of its value.
What are Ripple and XRP?
Before getting into the possible reasons behind XRP’s recent price struggles, it’s important to review what Ripple is and the usage of XRP. Ripple consists of two parts; a money transfer platform (RippleNet), and its preferred currency (XRP). The system aims to provide a convenient international payment and money transfer platform for financial institutions and payment service providers. A long list of major investment banks are using Ripple’s services such as Standard Charter, Santander, and MUFG.
Meanwhile, XRP is a digital asset used for transferring value.