Ripple (XRP) has ceded its position as the second most valuable cryptocurrency on the market after losing more than 20% in the past 24 hours.
The cryptocurrency performed strongly on Sunday, rising more than 9% to close the session at $3.38. However, the cryptocurrency experienced a sharp correction earlier in today’s morning session, as shown by Coinmarketcap’s price average. According to the Coinmarketcap data, the Ripple price is currently hovering around $2.60.
The sharp drop likely reflects Coinmarketcap’s decision to temporarily exclude price data from South Korean cryptocurrency exchanges, where Ripple is being traded at a significant premium compared to other trading platforms. Prices on Bithumb, Coinone and Korbit, South Korea’s three largest exchanges, which together account for around 46% of Ripple’s 24-hour trading volume of $2.5 billion, have soared to over $3.80.
Strong retail demand from South Korea has been one of the factors behind Ripple’s price surge in the past couple of weeks. Last month’s announcement of a RippleNet-powered, cross-border payment pilot involving Japanese and South Korean banks has attracted many investors from the region to the digital token.
However, some industry figures have voiced concerns that Ripple’s meteoric rise could be a sign of a bubble.
“The reason ripple is surging so much is it’s a bubble,” Erik Voorhees, CEO of digital asset exchange ShapeShift, said last week, as quoted by CNBC. “Testing crypto with banks doesn’t make sense. The whole idea of crypto is you don’t need banks.”
Ripple, the San Francisco-based startup behind the cryptocurrency, develops distributed ledger technology aimed at facilitating real-time cross-border transactions between banks. So far more than 100 banks and other financial institutions have joined Ripple’s enterprise network, RippleNet. XRP is the network’s native token, but RippleNet clients are not required to use it.
“While it’s not required for banks to use XRP, as the native digital asset to the XRP Ledger it adds further value to customers in sourcing low-cost, on-demand liquidity,” a Ripple representative told CNBC in response to an enquiry about which firms are using the token.
To this date, the only RippleNet client that has used XRP is Mexican financial services firm Cuallix, which announced in October that had used the token for a cross-border payment between the US and Mexico. This has prompted some observers to point out that the growing number of RippleNet customers hasn’t so far translated into support for the XRP token itself.
“I think a lot of retail investors think that by investing in XRP they’ll be able to own a part [of the business], but they’re not a stock,” Dan Ciotoli, software engineer and blockchain analyst at Bespoke Invest, said last week, as quoted by CNBC.
“I’m kind of on the side that XRP itself is not going to be used by banks,” Ciotoli added.
Likely in an effort to address concerns of this nature, Ripple posted a tweet on Thursday, claiming that “3 of the top 5 global money transfer companies plan to use XRP in payment flows in 2018”.
“Even more in the pipeline,” it added.
The company’s chief executive officer Brad Garlinghouse said in a subsequent tweet: “Over the last few months, I’ve spoken with actual banks and payment providers. They are indeed planning to use xRapid (our XRP liquidity product) in a serious way.”
In today’s trading, the Ripple price stood at $2.57, as of 12:08 GMT. The token has lost 21.3% of its value in the past 24 hours.