A prominent member of the XRP community and blockchain analyst, Crypto Eri, has weighed in on why, contrary to some public opinions, Ripple cannot control its native token XRP’s price.
XRP “Decentralized” Nature Makes Price Set Impossible
In a tweet shared on her X (formerly Twitter) platform, Crypto Eri stated, “Decentralized crypto-assets like XRP cannot be price set.” Instead, XRP’s price is determined by supply & demand dynamics in the global open market, sometimes with Influence factors like trading, sentiment, adoption, news & liquidity.”
XRP is the native token of the Ripple ecosystem, and for some time now, some crypto community members have asserted that the crypto company can control the price of the XRP.
However, the pro-XRP blockchain analyst has put out this tweet to debunk this belief. She further mentioned that the “deceptive false price hype” has “unfortunately reached unprecedented levels.
For one, Crypto Eri noted that the XRP token is decentralized. As such, there is no way Ripple can set the token’s price, considering it has little or no control despite being the issuer. Rather, as mentioned by Crypto Eri, such crypto tokens bow to the pressure of the “supply and demand dynamics,” meaning that the interest of traders in the asset ultimately sets a token’s price.
That is where price discovery comes in, as the interaction between buyers and sellers is usually used to determine the fair market value of an asset.
An Artificial Price Set?
Another prominent figure in the XRP community, Mickle, had earlier released a tweet (before Crypto Eri’s tweet) to highlight how absurd a ‘price set’ theory was. He mentioned that if a cryptocurrency could be price set, it would be an “infinite money glitch.”
He jokingly suggested that if a price set was possible, he could easily fork the XRPL and set the “price of XRP2.0 to 1,000,000.”
In response to Mickle’s tweet, another X user raised the possibility of Ripple setting XRP’s price “artificially” and gave a speculative example of OPEC setting the oil price. He explained further in a subsequent tweet that “deep pockets” or “coordinated efforts of many powerful entities” could help set the asset’s price artificially.
This point likely suggests that Ripple could simply set the XRP price by delving into the XRP market and buying the token at a price higher than its fair market value. Crypto Eri weighed in on this, admitting that artificial price setting had been tried in the past. Despite this, she believes that the role of arbitrageurs in the crypto market cannot be ignored as these traders will eventually balance the scale and eliminate the price disparity.
Token price performance over the years | Source: XRPUSD on Tradingview.com
Featured image from The Currency Analytics, chart from Tradingview.com
Credit: Source link
