Crypto investors and traders often overlook the economics of cryptocurrencies’ supply inflation. Understanding this is key in a market as diverse as cryptocurrency.
In this report, Finbold looks at the XRP Ledger (XRP) economics from a different perspective. We have collected public market data from the leading indexes to understand the effects of an increased supply inflation. With that, it is possible to calculate the exact price XRP would trade if it ever hits the all-time high market cap.
In simple terms, an increase in supply generally counters the demand. The interplay of these two factors influences whether a cryptocurrency’s price rises or falls. Each cryptocurrency, including XRP, has its unique economic structure or ‘tokenomics.’
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XRP had an all-time high market cap of $128.498 billion on January 4, 2018, according to TradingView’s CRYPTOCAP index.
Meanwhile, the token traded for as high as $3.84 on the same day, as registered by CoinMarketCap. An inverse calculation suggests a circulating supply of 33.463 billion XRP at that time.
XRP supply inflation and its economic effects
Let’s explore XRP’s supply inflation and its economic implications. As of this writing, XRP Ledger has a circulating supply of 53.718 billion XRP. This results in a supply inflation of 20.255 billion XRP (60.52%) in approximately six years, or around 10% a year.
An XRP price projection also shows the economic effects of this inflation. In case the project reaches its highest speculative demand of $128.498 billion market cap, XRP would trade at a proportionally lower price than the corresponding all-time high.
Considering the circulating supply on November 23, XRP would be priced at $2.39 per token at its highest capitalization. Interestingly, a loss of $1.45 (37.7%) from the previous price of $3.84 in 2018.
However, this still indicates a potential 290% increase from the current price of $0.61.
It is important to understand that the forecast requires the same demand as 2018 for XRP. In this context, there are no guarantees that this demand will ever be seen again. On the other hand, it is also possible that a higher demand surges in the following years.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
