Key Points:
- XRP’s liquidity has been steadily increasing since June, even after the Ripple vs. SEC excitement waned.
- Higher liquidity benefits investors by reducing barriers to cashing out and lowering price volatility.
- The acquisition of Fortress Trust positions XRP to welcome institutional investors and strengthens its market presence.
XRP has been steadily increasing its liquidity since June, a trend that persists even after the initial excitement surrounding Ripple’s victory over the US Securities and Exchange Commission (SEC). This sustained liquidity surge holds promising implications for XRP’s price outlook.
Robust Liquidity Continues
A recent report from cryptocurrency market data provider Kaiko underscores XRP’s exceptional liquidity levels compared to three months prior. The initial surge occurred in mid-July, coinciding with Judge Analisa Torres’ pivotal ruling in the Ripple vs. SEC lawsuit.
In contrast to trading volume, which swiftly declined in the ensuing weeks, liquidity remained predominantly high. Initially, liquidity soared by over 100%, and while it has since retreated from its 2023 peak, it still maintains a 50% increase from pre-judgment levels.
Kaiko’s report highlights a 33% uptick in market depth, rising from $6 million in June to $8 million in September. Market depth measures a cryptocurrency’s ability to handle substantial orders without causing significant price fluctuations.
This heightened liquidity proves advantageous as Ripple prepares to embrace institutional investors, following its acquisition of Fortress Trust and the acquisition of more than 30 money transmitter licenses. This development opens the door for institutional investors to hold XRP, whether temporarily or permanently, as they increasingly utilize Ripple’s ODL (On-Demand Liquidity) solution.
Implications for XRP Price
In the realm of assets, particularly digital ones, liquidity depth holds paramount importance for investors. Greater liquidity ensures investors can easily exit positions when necessary, eliminating potential hurdles. Consequently, this liquidity surge presents a bullish outlook for XRP’s price.
As institutional investors show growing interest in XRP, the deep liquidity provides yet another incentive for them to incorporate this digital asset. Heightened liquidity also equates to reduced volatility, a factor likely to resonate with larger players entering the market, potentially driving XRP’s price higher.
Evidence of increased investor demand is observable in real-time, with the number of XRP holders in the top 0.01% (those holding at least 5.755 million tokens) rising to 478. Furthermore, daily trading volume exceeds $1 billion, signaling robust investor participation.
Presently, XRP’s price stands at $0.5165, reflecting a 1.73% increase in the past day. Although the price may currently appear modest, the mounting demand suggests that the digital asset’s value could experience a resurgence in the near future.
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Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.
