Related Articles

XRP: Is This Another Pump And Dump Stock

BitForex Editor
Feb 05, 2021

What is XRP?

XRP is designed for payments as a digital asset. The native digital asset can settle transactions in 3-5 seconds on the XRP Ledger, an open-source, permissionless, decentralized blockchain technology.

Without having a central intermediary, XRP can be sent directly, making it a handy tool to quickly and easily bridge two separate currencies.

How are XRPs used?

XRP and the XRP Ledger are used faster, less expensive, and more flexible than any other digital asset to power disruptive technology around the payment space. To help unlock new XRP utilities and transform global payments, Ripple focuses on building technology. There are also other XRP-related use cases being pursued by third parties.

The price of the Ripple began the week well. The price of the XRP is trading at $0.5617, 235% above the year-to-date low of $0.1660. It is also around 30 percent below last year's peak point. Other cryptocurrencies are relatively mixed, such as Bitcoin, Ethereum, and Litecoin, with the three down in the Asian session by more than 1 percent.

Background: In recent months, after the SEC started investing in the firm, Ripple has been under extreme pressure. Unlike other decentralized currencies such as Bitcoin, XRP is safe, the case argues. Ripple defended itself, arguing that XRP was like BTC, an open-source currency. As a result, several influential exchanges of cryptocurrencies agreed to delist or suspend the XRP offering.

Is XRP another pump and dump scheme?

A Telegram channel is doing the same for XRP, perhaps motivated by the events of the past few weeks in which a Reddit forum-WallStreetBets-pumped GameStop shares and other stocks.

The WallStreetBets pump's after-effects are transitioning to the crypto industry, where the pump has gained from Dogecoin (DOGE) and Tron (TRX).

XRP surges by more than 50%

The token's price increased from $0.35751 in less than an hour to a 24-hour peak of $0.4893, CoinMarketCap data shows. At first, the digital was trading under $0.30.

In the last 24 hours, XRP's trading volume has risen by 123 percent to $16.9 billion.

In a Reddit forum, the frenzy of pumping smaller stocks began and seems to have inspired a group of crypto traders who feel that a similar pump can be coordinated. There were reports that there was an increase in the number of new member signings recorded by WallStreetBets and other crypto forums.

However, the cryptocurrency industry appears to be inclined towards Telegram, and it is in these groups that the XRP pump has been coordinated.

A Twitter user wrote that a community of 55,000 members is planning crypto pumping. Another user also noted that starting Feb. 1, a growing Telegram community that gained more than 10,000 followers within hours plans to pump XRP.

XRP is not out of the woods

Except for the possibility that a group is behind the pump, there seems to be no apparent reason for XRP's surge.

Since Dec. 22, when the U.S. was in force, the XRP token has been under fire. A lawsuit was brought against Ripple by the Securities and Exchange Commission (SEC) over the illegal sale of a security, the XRP token.

Yesterday, Ripple announced that it had filed a court response to the lawsuit with Stuart Alderoty, general counsel of the firm, claiming that they are fighting for the entire industry.

Given that Ripple has to pay its clients to deploy dubious technology pilots, you might be wondering how Ripple is still a concern. Of course, the reason is that there is only one way it makes money: by pumping up the XRP value.

What is going on with the markets?

When groups of people can easily manipulate the markets, the pump raises questions. Previous reports of crypto market manipulation are available, with some projects being pump and dump schemes.

The analyst argues that Telegram did not cause an XRP surge.

Even though much of the XRP price increase was due to the Telegram Group's attempts to drive the XRP price higher, some were not as persuaded. "Credible Crypto said: "Let's run the numbers for some context. Today's 24H amount on XRP was over 26B. Even if EACH dropped $5,000 today on XRP from the groups' members, that equates to 2 percent of the total daily amount. Here, let's be rational-no telegram group is pumping the fifth-largest space coin.

In any case, the pump and dump are short-lived because, within a matter of hours, the digital token lost more than half of its value.

It has also been speculated that the fact that XRP prevailed over the weekend is a positive response to the United States Securities and Exchange Commission (SEC). The agency is currently suing Ripple for the selling, in the form of XRP tokens, of unregistered securities.

XRP liquidity

XRP is currently trading on CoinMarketCap at $0.3433, declining sharply after witnessing a more than 100 percent spike over the weekend. Nevertheless, as it has managed to smash through the $0.30 psychological barrier, its current price level could still be something of a win.

The sudden drop in prices due to XRP's lack of liquidity was attributed to Jesse Proudman, CEO of crypto hedge fund Strix Leviathan. He clarified that the only reason why XRP pumps and dumps could occur was that the liquidity of XRP has "become incredibly thin," with the digital token being delisted by significant exchanges. He also added:

"This lack of liquidity provides global communities with opportunities to coordinate pumps and dumps, which is exactly what the price action appears to indicate.

Of course, pump and dump strategies exploit the asset's perceived value in question, not its intrinsic value, which is different from its speculative interest. It's safe to say XRP isn't a pump and dump scheme. How can a pump and dump scheme by a decentralized protocol? Much like BTC, the asset is at the mercy of the network. Sure, since it's a volatile asset class, both assets will pump then dump, but the project is not a scam to propagate a pump and dump.

About BitForex:

BitForex is an exchange service platform that can be classified as one of the Top 10 cryptocurrency exchange services. It is focused on providing millions of users with a digital currency trading and investment tool that is not only safe but also professional and convenient. BitForex has a high customer-oriented culture and state-of-the-art financial technology.

BitForex is programmed in a way that it can quickly adapt to the changes of the Crypto market while introducing new features like margin trading, enhanced trading charts,  derivatives, and a host of others. The headquarter of BitForex is located in Hong Kong, while there are branch offices in countries like the United States, South Korea, and Singapore.

More details:

BitForex / Social Trading / CAPP TownEazySwap

Scan to download for iOS or Android