Amidst swirling discussions and concerns within the cryptocurrency community regarding the price performance of XRP, Ripple’s Chief Technology Officer, David Schwartz, has taken to X (formerly Twitter) to address and clarify the company’s position and actions related to XRP sales.
This conversation comes at a time when allegations of price manipulation have been levied against Ripple, particularly focusing on how the company’s handling of XRP could potentially affect its market value.
Ripple CTO Clarifies Impact Of XRP Sales
Schwartz’s initial response to the community’s apprehensions emphasized Ripple’s commitment to transparency and a strategic approach to selling XRP. He directly addressed the community’s concerns, stating:
I understand caring how much we sell, but honestly I don’t really understand why people think it matters so much exactly how we sell XRP. Yes, we choose when to sell. Yes, we choose how much to sell. And everyone can see how much XRP comes out of escrow and how much goes back in.
This statement was aimed at reassuring the community that Ripple’s actions regarding XRP sales are both deliberate and transparent, especially in light of the discontinuation of programmatic sales highlighted in Ripple’s Q1 2023 XRP markets report.
The conversation took a deeper turn when @Darkhorse raised the notion of “Letting XRP Breath” by proposing a temporary halt on sales to potentially aid in price discovery. Schwartz’s retort was pointed, questioning the underlying logic of such a pause, “Are you asking us if we’ve considered manipulating the price?”
This exchange underscores the delicate balance Ripple seeks to maintain between influencing the market and fostering an environment where XRP’s price is determined by market dynamics.
Further, Schwartz elaborated on the complexity of the issue, indicating that halting sales could itself be construed as a form of manipulation, challenging the community’s perception and expectations, “That’s what I don’t understand! Either it is or it isn’t. There’s no third alternative. […] If it’s manipulation, why are you asking us to do it? If it’s not, then what is this entire issue even about?”
What Really Drives XRP Price
In a revealing comment about Ripple’s long-term strategy and the challenges faced, Schwartz acknowledged, “We were originally hoping to get our holdings way down in just a few years mostly using giveaways. That strategy just didn’t work.”
Schwartz added that Ripple does not want to hold “lots of XRP for decades, but it’s not clear what other options we have.” Addressing the broader question of what influences XRP’s price, Schwartz was unequivocal in his view that external factors play a more significant role.
He remarked: “I believe the primary drivers of XRP’s price have almost nothing to do with any factors specific to the XRP ecosystem.” This perspective is crucial, highlighting the CTO’s belief that market forces, rather than Ripple’s specific actions, are the main determinants of XRP’s price.
Correlation With XLM
The discussion also ventured into the potential impact of burning unused escrowed XRP, a suggestion from the community as a means to positively affect its price. Schwartz was skeptical of this approach, drawing parallels with Stellar Lumens’s burn event, which he noted had “no real effect” on its price, thereby questioning the efficacy of such measures.
When probed about the price correlation between XRP and Stellar Lumens (XLM), Schwartz offered insights, suggesting that the similarity in price movements could be attributed to external factors common to both cryptocurrencies rather than internal ecosystem dynamics.
“I can’t prove that there’s any particular explanation. But I think it’s because the primary drivers of the price of XRP come from factors external to the XRP ecosystem and common to XRP and XLM,” he stated.
Moreover, Schwartz provided alternative theories but remained firm in his belief that external market forces were the primary drivers. He said:
I’ll give two alternative explanations that I don’t believe are correct, but that you may want to consider: 1) XRP is bigger than XLM and the market considers them somewhat comparable, so XRP “drags” XLM around somehow. 2) Some person or conspiracy of people are manipulating XRP and/or XLM’s price to make them track each other.
At press time, XRP traded at $0.5586.