According to the valuation, if XRP can capture 10% of the global derivatives market, the price of XRP could reach four digits, but there is a catch.
XRP has been the focus of multiple bullish predictions recently. One of the main factors contributing to this trend is the untapped potential of the altcoin and its associated blockchain, the XRP Ledger (XRPL).
XRP is undervalued
In particular, XRP started off well a few years ago, with its price increasing over 60,000% from 2017 to January 2018, reaching an all-time high of $3.31. Within this period, XRP’s growing utility in cross-border payments became evident, with XRP controlling over 30% of the total cryptocurrency market.
However, since then, XRP has lost its dominance in the market, greatly reducing its usefulness. The SEC lawsuit, which lasted from December 2020 to August of this year, contributed to XRP’s setback. Currently, XRP is trading more than 80% below its ATH six years ago, and most analysts believe it to be one of the most oversold crypto tokens.
According to some commentary, its fair market value could range from $4,813 to $13,386. Some believe that the price of XRP could reach even higher levels if the financial scene fully realizes the potential of XRP and fully embraces its attractive utility in payments.
XRP price accounts for 10% of the global derivatives market
One area that some analysts have suggested that XRP could dominate is the derivatives market. For the uninitiated, a derivatives market is a financial market that derives the value of contracts (derivatives) from underlying assets such as stocks, bonds, commodities, currencies, and even cryptocurrencies.
According to some estimates, the global derivatives market is worth $1,000 trillion in national value, making it by far one of the largest financial markets in existence. If the XRP Ledger hosts about 10% of this value, it would be $100 trillion, much larger than the entire cryptocurrency market.
In particular, assuming this $100 trillion market is captured by XRPL’s native token, XRP, its price could jump to $1000, considering the total supply of 100 billion tokens.
However, while this estimate sees XRP price as ambitious, most of its assumptions are questionable. Notably, some financial commentators have ignored the $100 billion notional value of the derivatives market, suggesting that it is grossly overvalued.
Additionally, this estimate suggests that XRP will capture the entire value of XRPL, which is highly unlikely. Despite using XRP as its gas token, XRPL also hosts several other assets. As a result, any notional value the network has will be shared between these tokens, as long as XRP is able to capture a large portion of it.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the personal opinions of the author and do not reflect the opinions of The Crypto Basic. We encourage our readers to conduct thorough research before making any investment decisions. Crypto Basic is not responsible for any financial losses.
