XRP’s recent market activity has caught the attention of both traders and analysts, as the cryptocurrency breaks free from long-standing technical patterns and posts significant gains. Following its over 10% weekly increase, XRP has not only surpassed key resistance levels but also set itself up for potential higher returns in the coming months. Meanwhile, Ripple’s plans to launch a new stablecoin, Ripple USD (RLUSD), face hurdles, particularly on the XRP Ledger, sparking debates over its broader ecosystem strategy.
Ripple’s Launch of RLUSD Faces New Challenges: Ethereum Dominance, XRPL Limitations, and Community Backlash
The highly anticipated launch of Ripple USD (RLUSD), a stablecoin pegged to the US dollar, has hit unexpected complications. Initially, RLUSD was expected to launch this year on both XRP Ledger (XRPL) and Ethereum, providing Ripple with a powerful new financial tool to expand its offerings. However, recent updates indicate that RLUSD may face functionality restrictions on XRPL, which could lead to the stablecoin being launched exclusively on Ethereum first or in a limited capacity on XRPL.
Ripple initially planned to launch RLUSD on both XRPL and Ethereum, leveraging the unique strengths of each platform. Ethereum’s vast ecosystem and established infrastructure would provide RLUSD with a strong entry into the decentralized finance (DeFi) space, while XRPL would give Ripple the ability to offer a decentralized stablecoin solution natively. However, these plans have taken an unexpected turn.
According to recent reports, RLUSD’s launch on Ethereum is set to go ahead as planned this year. However, the deployment on XRPL is now in question, particularly in terms of its full functionality. While RLUSD can still technically launch on XRPL, it will not be compatible with XRPL’s Automated Market Maker (AMM) system, a feature many in the community had expected. Instead, RLUSD would only be available through XRPL’s decentralized exchange (DEX) orderbook, significantly limiting its utility on the platform.
The reason behind these limitations stems from XRPL’s clawback feature, which plays a crucial role in preventing RLUSD from being used in the AMM system. The clawback feature allows issuers of assets like RLUSD to freeze or reclaim tokens in cases of misuse or blacklisting, making it an essential tool for regulatory compliance. However, this feature conflicts with XRPL’s AMM, preventing the stablecoin from being fully integrated into the system at launch.
There is hope for a resolution in the form of two upcoming amendments, XLS-73 and XLS-77, which aim to improve the way XRPL’s AMM interacts with frozen assets and enhance trustline restrictions for blacklisted accounts. XLS-73 would focus on improving the AMM’s handling of frozen assets, making it possible for RLUSD to operate within the system. XLS-77, meanwhile, introduces a more stringent freeze mechanism that prevents blacklisted accounts from transferring RLUSD, further enhancing security and regulatory compliance.
Despite these amendments being in the pipeline, their implementation remains uncertain. XRPL operates as a decentralized network, meaning any changes require approval from the community, and the timeline for adoption is unclear. With some signs of community fatigue setting in, it’s possible that the amendments could face delays.
Ripple’s Chief Technology Officer, David Schwartz, addressed the ongoing challenges, offering insight into XLS-77’s impact on XRPL’s functionality. Schwartz explained that XLS-77 would not impose an extreme freeze, as some in the community have feared. Instead, assets like RLUSD would remain in unfrozen accounts, though with added restrictions that could hinder certain payments.
However, Schwartz acknowledged that while technical progress is being made, RLUSD’s launch on XRPL might not meet all expectations right away. As a stablecoin that’s crucial to Ripple’s future, RLUSD needs to be launched with full functionality, and the XRPL community might have to exercise patience as these issues are ironed out.
Community Frustrations and Backlash
The Ripple community, particularly those loyal to XRPL, has voiced significant frustration over the RLUSD situation. Many were hoping for a seamless and full-featured launch of the stablecoin on XRPL, seeing it as an essential part of Ripple’s growth strategy. However, with RLUSD poised to launch fully on Ethereum without any of the same restrictions, many XRPL advocates are feeling sidelined.
The frustration stems, in part, from long-standing tensions between the XRP community and Ethereum. Some in the XRP community view Ethereum’s dominance in the DeFi space as a direct challenge to XRPL’s potential, and RLUSD’s apparent preference for Ethereum has stoked these feelings. Moreover, the association with Ethereum’s co-founder Vitalik Buterin—who has historically been critical of Ripple—has not helped to quell the community’s concerns.
Ripple finds itself in a challenging position as it works to balance the technical realities of RLUSD’s launch with the expectations of its community. On the one hand, Ethereum offers a more immediate and functional platform for the stablecoin’s release, enabling Ripple to tap into the DeFi market without delay. On the other hand, the long-term success of RLUSD depends on its integration with XRPL, a network that Ripple has invested heavily in developing.
The amendments, such as XLS-73 and XLS-77, represent a path forward, but the uncertainty around their implementation timeline poses a significant hurdle. Ripple’s leadership, including David Schwartz, will need to continue to engage with the community to manage expectations and explain the technical and regulatory reasons behind these delays.
XRP’s Bullish Surge: Breaking Down a 3.5-Year Downtrend and Eyeing $1 by Q4
Meanwhile, XRP has been on an impressive upward trajectory, closing last week up 9.19%, overcoming key overhead resistance at $0.60. For the month, it’s up more than 10% and on pace to close its strongest quarter since Q1 2023, which occurred 15 months ago. This bullish price movement has sparked excitement among investors and analysts, as XRP seems to be on the cusp of significant technical breakthroughs.
In the past few weeks, XRP has led the cryptocurrency market in gains, buoyed by increasing open interest. According to market data, XRP’s price action has stood out, with it breaking through multiple resistance levels that previously stymied upward movement. This growth could mark the start of a more sustained bull market for the digital asset.
One of the most significant developments in XRP’s recent price action is its break from a long-standing 3.5-year downtrend. On July 13, 2023, XRP was declared “not a security” in a landmark ruling, which sent its price soaring to $0.95. However, despite the initial rally, XRP consolidated, closing that month at $0.69. Over the past year, the token has traded sideways, but its recent performance may signify the start of a much larger upward trend.
The downtrend which had acted as a strong resistance point since XRP’s all-time high in January 2018 has now been flipped. The breakout from this descending trendline has encouraged both traders and technical analysts to predict further bullish movements. Independent technical analyst “The Charting Guy” notes that XRP not only broke its 3.5-year downtrend but also cracked a seven-year downtrend, suggesting that XRP could be entering a new phase of long-term growth.
One particularly bold prediction comes from independent trader Javon Marks, who argues that XRP could rally another 30,000% from its current price to reach a staggering $200. Marks explains that XRP has broken out of a 7-year pennant pattern, and he expects this breakout to trigger a “full logarithmic follow-through.”
If this scenario plays out, XRP could replicate its historic surge from 2017, which saw the token skyrocket by 42,000% to its all-time high of $3.40. However, it’s important to temper expectations. A $200 XRP would result in a market cap of over $11 trillion—11 times Bitcoin’s current market cap. While the technical pattern suggests massive upside potential, such extreme gains remain speculative and are unlikely in the short term.
Path to $1 in Q4 2024
Despite the ambitious predictions for a $200 XRP, a more realistic target in the near term is the psychological $1 mark. XRP’s recent weekly close of $0.642 marks its highest level since December 2023. However, the token has been stuck in a consolidation range between $0.66 and $0.42 since August 2023.
For XRP to continue its upward trajectory, it must flip $0.66 into support, a key level it has struggled to hold over the past year. Above this level, XRP faces resistance at $0.75, which has been tested multiple times, most recently in February 2024. If XRP manages to break through this level, there is little resistance between $0.75 and $1. A successful move above $0.75 could lead to XRP targeting $1, a milestone that would solidify its recovery from the long-term downtrend.
Dom, a prominent market analyst, supports this view, stating that XRP is “gearing up for a move” in the short term. According to Dom, XRP’s price action has formed a pattern of higher lows and lower highs, indicating that the $0.63 level may serve as a support base in the coming days. From this base, XRP could mount an assault on higher resistance levels, potentially pushing it toward the $0.75 mark and beyond.
The current market environment is conducive to bullish price movements for risk-on assets like XRP. With major macroeconomic uncertainties fading and renewed interest in cryptocurrencies as risk-on assets, XRP could be one of the beneficiaries of a market shift towards speculative assets. As Bitcoin and Ethereum consolidate, altcoins like XRP are gaining attention for their relative undervaluation and strong technical setups.
While much of the broader crypto market has been focused on Ethereum and Bitcoin, XRP’s breakout from its downtrend has reignited interest in the asset. The token’s fundamentals have also improved following Ripple’s legal victory against the SEC, which has led to a more optimistic outlook for XRP’s future.
This article was originally Posted on Coinpaper.com
