XRP, a cryptocurrency designed as a bridge currency for seamless transactions between different currencies without traditional financial intermediaries, has shown significant gains in the past week, jumping by more than 20%. Despite experiencing volatility in its market capitalization in recent years, with a peak of $140 billion in early 2018 before plunging to under $10 billion in 2019, XRP is one of the best-performing cryptocurrencies in the market. With its total market capitalization standing at $23.2 billion, it ranks as the 6th largest cryptocurrency after USD Coin and above Cardano.
However, XRP faces stiff competition from other altcoins, especially those that focus on cross-border payments. For instance, Stellar Lumen (XLM), another cryptocurrency designed to facilitate cross-border payments, has emerged as a formidable competitor for XRP. Moreover, traditional financial institutions are also developing their digital currencies and blockchain solutions that could potentially compete with XRP.
Despite the competition, XRP has been adopted by several major institutions, including American Express, Standard Chartered, and Santander. Ripple, the company behind XRP, has also partnered with over 300 financial institutions worldwide to use XRP for cross-border payments. However, the coin still faces regulatory hurdles in several countries, including the United States.
XRP’s less than stellar performance in recent years can be attributed to the US Securities and Exchange Commission’s (SEC) lawsuit in 2020. The regulatory agency filed a lawsuit against Ripple Labs in December 2020, alleging that XRP was an unregistered security. The lawsuit has had a significant impact on XRP’s performance as several cryptocurrency exchanges delisted the currency due to regulatory uncertainty.
XRP’s adoption and regulatory environment remain uncertain. Even so, the altcoin has the potential to revolutionize cross-border payments.
Chart Analysis
According to the daily chart, XRP has made significant gains in the past week amid uncertainty about the SEC lawsuit. The digital asset has been moving along the ascending trendline, shown in yellow, and has remained above the 50-day and 100-day moving averages, while its Relative Strength Index (RSI) moves higher. The Moving Average Convergence Divergence (MACD) indicator is in the bullish zone but hints at a limp in the bullish momentum.
Therefore, the XRP price is likely to continue to rise in the medium-term, and a break through the important resistance level at $0.4949 may initiate further gains. However, a drop below the crucial support level of $0.400 will invalidate the cautiously bullish outlook.
Competition
Stellar Lumen (XLM) is one of XRP’s competitors in the cross-border payments space. Lumen is the native utility token of the Stellar blockchain, whose primary aim is to provide fast, secure, and low-cost cross-border payments. Similar to XRP, Lumen is designed to facilitate global remittances, micropayments, and cross-border transactions. Stellar boasts of partnerships with IBM and Deloitte, global leaders in technology and consulting, respectively.
Notably, in 2019, IBM announced that it would partner with Stellar to launch the World Wire network, a cross-border payments system comparable to Ripple’s cross-border payments, using Stellar’s digital currency, Lumen. IBM aims to provide fast, secure, and low-cost cross-border payments across 72 countries. Partnerships such as these are central to the competitiveness of Lumen and serve to increase its accessibility and adoption.
XRP also faces competition from traditional financial institutions that have started developing their digital currencies and blockchain solutions. For instance, JPMorgan has created JPM Coin, a digital currency that will allow institutional clients to make instantaneous payments using blockchain technology. China, through its central bank, has also developed its digital yuan, which aims to digitize the country’s fiat currency, the renminbi. Facebook is also at an advanced stage in developing its digital currency, Libra.
Conclusion
XRP has enjoyed significant gains in recent times, and its adoption by major financial institutions and partnership with over 300 financial institutions globally to use XRP for cross-border payments are significant developments that will likely promote the cryptocurrency’s use. However, the uncertain regulatory environment in several countries, including the United States, remains a significant hurdle for XRP. With competition from other cryptocurrencies, such as Stellar Lumen, and traditional financial institutions developing their digital currencies and blockchain solutions, the battle is still for the cryptocurrency to revolutionize cross-border payments.
