Ripple’s XRP performs far below the expectations of its main defenders
Ripple’s XRP has had a disastrous period in the past two years. At a time when other large-capped cryptocurrencies attempted a comeback, XRP lagged significantly behind. The digital asset emerged as the worst performing among the top 20 cryptocurrencies during the first quarter of 2020.
At $ 0.20, the cryptocurrency that has close ties to the San Francisco-based company Ripple remains 94% below the historic high of January 2018. Data from the Messari search platform recently gave us an insight under the hood to identify why the token performed dismally.
Messari noted that this may have something to do with the currency’s circulating supply, which subsequently resulted in the XRP having the highest rate of inflation among large-cap crypts.
20.5%: XRP inflation rate is quite alarming
The data provided by Messari shows that there is now 20.5% more XRP in circulation this year compared to last year. This is because XRP has an annual inflation rate of 20.5% – the highest among large-cap cryptocurrencies.
Also according to Messari, there are currently approximately $ 29.86 billion in XRP tokens in circulation. This amounts to just 30% of the coin’s maximum supply. For comparison, 87.5% of BTC’s maximum offer is already in circulation.
However, the reason why the circulating supply of the token is skyrocketing at a shocking rate is not a mystery. Ripple, the blockchain company behind the token, unlocks $ 1 billion of XRP at the beginning of each quarter. Millions of these tokens are used to grow the Ripple ecosystem through investments and strategic partnerships.
While in reality, Ripple needs to sell coins to expand the usefulness of the token, this strategy has not been well received by most of the crypto community, as constant sales are believed to inhibit the growth in XRP value.
Ripple has unlocked at least $ 5 billion in XRP from custody so far. With $ 49.4 billion still blocked in guarantee portfolios, sales are likely to continue for the next 21 years.
How other large-cap crypts fared
In addition to XRP, Tezos (XTZ) is the only other major cryptocurrency with a relatively high inflation rate of 13.1%. But, unlike the Ripple token, Tezos has performed well in recent months, with more than 55% gains in the year. The currency has even consolidated its position among the top ten cryptocurrencies. Most observers believe that XTZ is shining due to its security model, Proof of Stake (PoS), which is gaining momentum in the crypto industry.
Other major cryptocurrencies like Ethereum (ETH), EOS and Litecoin (LTC) have an inflation rate of 4.7%, 2.6% and 5.1%, respectively.
Bitcoin, meanwhile, recently completed its third halving. As such, the reward of 12.5 BTC has been reduced to 6.25 BTC, resulting in fewer Bitcoins being minted per day. The BTC inflation rate is now 3.8%, lower than that of gold. It is also significantly lower than the XRP inflation rate.
Meanwhile, XRP is valued at $ 0201346 at time of publication, up 3.81% on the day.