Wells Fargo analyst predicts XRP price will hit $100-$500
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(Kitco News) - Eye-poping price predictions are common once bullish energy returns to the cryptocurrency market, and the current cycle is no exception, as one analyst from Wells Fargo predicts that XRP (XRP) could skyrocket as high as $500 over the next four to seven months.
Shannon Thorpe, a Business Support Manager at Wells Fargo, shared her insights into the XRP token on Saturday, saying that while the XRP community, commonly referred to as the XRP Army, is more divided than ever, she sees a positive future in the near term thanks to the recent ruling that the XRP token is not a security.
“One side looking at only charts, taking cues from the past and trends that follow Bitcoin to draw short-term price predictions,” she said. “Whilst others cling to utility, believing that partnerships and the replacement of antiquated systems will drive price. Neither side has been correct, nor in the future, will either side be correct.”
Speaking directly about the XRP ruling, Thorpe said, “Why would we continue to pretend it is and make price predictions based on ‘Securities’ in the crypto space? This logic seems counterintuitive.”
Many analysts have given XRP a price target ranging from $1 to $10, but Thorpe suggested that the token’s price would need to be significantly higher if it hopes to compete with systems like the Society for Worldwide Interbank Financial Telecommunication (SWIFT).
“SWIFT handles about 44.8M messages a day – these are just messages, not settlements, and only half of what XRP can do,” she said. “Now let’s say that [the] dollar value for SWIFT is $7T a day (not 24/7 or 365) – if Ripple through its 10 years of innovation and partnerships were only able to grab 30% of SWIFTs value that would be 2.1T in daily value (approx. 13.2M messages).”
“If you set a range for XRP, say $1.00 - $5.00, you are ultimately saying that if one company owned ALL the XRP, YES, all 100 billion, they would have a Liquidity Strength (LS) from $100B to $500B,” she said. “This LS does not account for any growth in the economy, the action of messaging and settling, nor the 24/7 365 benefits we receive using XRP.”
“If I were to send a $750M transaction with an LS of, say, $1.00, that is roughly 10% of all that banks XRP,” Thorpe noted. “Furthermore, there is more than one client, and no one wants to break that $750M into 750,000-$1,000 transactions (each having a burn rate).”
In this scenario, one bank holds all the XRP liquidity. In reality, there are numerous small investors that hold the token, a portion of the XRP supply has been permanently destroyed (burned), and multiple large banks also have an allocation.
“If I had to guess, [there are] 50 – 75B XRP at any one-time supporting LS,” Thorpe said. “Now spread that across, say 300 – 1000 different banks, liquidity providers and governments. $1.00 * 75B = $75B. $75B / 1,000 (banks) = $75M XRP/dollars for each bank and/or liquidity provider.”
Thorpe highlighted several assumptions that need to be considered in determining a price for XRP, including that “all big banks will have more XRP and that small banks will use more liquidity providers; liquidity providers will purchase from exchanges/us; and Ripple has released ALL of their XRP from escrow to get to 75B (If circulating supply is less than 75B, price per XRP is exponentially higher).”
“Given LS is roughly $75M per bank, and J.P. Morgan being a top-tier bank moving more than $8T a day, and say due to service overlaps with SWIFT and the assumption that Ripple only captured 10% of that market, equaling ($800B) (remember only 75B XRP is out there), $1.00 is not enough to move that kind of money, but that should go without saying,” she said. “This is just cross border transactions, not derivatives, real estate, CBDC (to include but not limited to foreign countries, banks and projects) technical parallels and NFTs.”
Based on these facts, Thorpe said her “price prediction is anywhere from $100 - $500 near short term (4 -7 months).”
“It all boils down to LS. If XRP is $100 at a supply of, say, only 50B that makes an LS of $5T and at $500, that gives us an LS of $25T,” she said. “This gives the market room to breathe, allows for growth and ensures no one company needs to own billions of XRP to perform day-to-day operations.”
As far as how and when this will happen, Thorpe said it would happen at “A flip of the switch.”
“I say this as I believe there will / has been an evaluation for XRP, like gold,” she said. “This is how they will price you out; this is what I believe Rosie Rios meant when she stated, ‘The train has left the station’ and this is how the governments control the next world of finance.”
|XRP price spikes 98% as judge rules the token is not a security in partial victory for Ripple Labs|
The XRP Army responded positively to this analysis, but there were also plenty of detractors saying it was unrealistic. Only time will tell how things will play out. Still, the ruling that XRP is not a security has brought fresh momentum to the cryptocurrency ecosystem and diminished some of the fear that the ecosystem had around enforcement actions from the SEC.
Following the XRP ruling on July 13, the token surged 97.1% to hit a high of $0.933 and has since pulled back into consolidation near $0.70.
BTC/USD Chart by TradingView
Multiple large U.S.-based crypto exchanges that had previously delisted the token, including Coinbase and Kraken, have also relisted XRP in the wake of the ruling, which provided a boost to its trading volume. There are now more than 583 trading pairs for XRP across exchanges, according to data from CoinMarketCap.