A recent community discussion has spotlighted the uncanny similarity in the price movements of XRP and Stellar (XLM). Ripple’s Chief Technology Officer, David Schwartz, offered his insights into this intriguing phenomenon, suggesting that external factors might be influencing the parallel behaviors of these two cryptocurrencies.
Schwartz, who has been instrumental in the development of the XRP Ledger, acknowledged the complexity surrounding the price correlation between the ripple token and XLM. He pointed out that while there is evidence supporting the influence of external factors, there are also arguments against this theory. This duality underscores the multifaceted nature of cryptocurrency price dynamics.
XRP Token Burn Unlikely to Boost Prices
A significant point raised by Schwartz was the impact of Stellar’s massive token burn last year. Stellar cut its total supply by half, yet this drastic reduction did not significantly affect the price of XLM or its correlation with the ripple token. This observation led Schwartz to believe that a similar burn of Ripple-owned token would unlikely yield a positive price impact. He referenced charts comparing the price behaviors of XRP and XLM before and after Stellar’s burn, which showed no significant deviations.
Despite their similar price trajectories, XRP and XLM have distinct tokenomics. The ripple token boasts a total supply of 99.98 billion tokens, with 55.43 billion in circulation, a price of $0.525, and a market capitalization of $29.1 billion. In contrast, XLM has a total supply of 50.001 billion tokens, 28.976 billion in circulation, a price of $0.1083, and a market capitalization of $3.14 billion.
The price correlation between XRP and XLM can be traced to their intertwined histories and market dynamics. Stellar, created by Ripple co-founder Jed McCaleb as a decentralized alternative, often mirrors XRP’s movements. Investors frequently seek opportunities in similar assets, causing capital flows that synchronize the price actions of these two cryptocurrencies.
In conclusion, while the price movements of XRP and XLM continue to mystify the community, Schwartz’s perspective sheds light on the potential external influences and the intricate market dynamics at play. As these cryptocurrencies evolve, their price behaviors will undoubtedly remain a topic of keen interest and debate.