The start of 2019 produced some epic bounce plays throughout the crypto markets, yet not every coin or token performed the same. During this market cycle we’ve seen many old 2017 ICO projects die, as well as microcaps getting delisted and losing liquidity.
Out of the larger market cap coins, XRP has underperformed most other crypto markets.
The main reason why XRP isn’t performing well is likely because there’s more supply on the market than demand. Every year Ripple Labs sells hundreds of millions of dollars worth of XRP, which may have the effect of suppressing the price. The USD charts produced lower lows into a descending triangle and the XRP/BTC charts have been in a bear channel for most of 2019.
Although XRP was a top gainer in 2017, its rallies were short lived and sold into fairly quickly. At one point the XRP/BTC chart crashed so low that it did a full rerace back into the 2016 lows.
Although many banks have been testing the Ripple protocol, they can still send transactions without needing to use the underlying XRP asset. This means that demand is mostly speculation, which makes it difficult to absorb all the fresh supply hitting the market.
Ripple Labs has been selling XRP since 2013 and since it’s a centralized company selling a token that offers no equity, the model is pretty much an ICO. This technically makes XRP one of the longest ICOs in history, with Ripple Labs still controlling around half the supply.
In this video we look at the charts, comparing XRP to the performance of other cryptocurrencies and take a deeper look into the supply/demand dynamics. The goal is to look at this market objectively without a strong emotional attachment in being for or against XRP.
Everyone knows the market cliche of “buy low, sell high” yet so few people can actually execute on it. The main reason is because market sentiment is at its most negative when prices are low and positive when high. Savvy investors are required to be contrarians and go against general market sentiment in order to apply that rule. All of this is done on the bleeding edge of the market without any guarantee of success.
Mainstream media tends to fuel hype by taunting traders into buying highs and shaking them out with fear at the lows. Over the past 10 years, bitcoin has been one of the most cyclical markets in the world. It’s often declared as dead, a ponzi scheme or attacked by trolls during the lowest points of capitulation. During the parabolic price rises market sentiment praises crypto and highlights how rich everyone is getting.
During the highs, profit takers are ridiculed and at the lows people preach about the risks of buying dips. Being a contrarian generally only works during market extremes when prices are out of balance. If you go against the herd mid trend, you could end up cutting profits short or buying dips too early. All of this is much easier said than done and timing is everything.
In this video we’re going to look at the two extremes of bitcoin price action during the last few cycles and examine market sentiment. We’ll see what kind of narratives were being pushed by the media as well as the general sentiment of investors.
Disclaimer: This is not financial advice, it is only my personal opinion and my conclusions could be wrong. Cryptocurrencies are considered high risk and it’s possible to lose all your money. Always conduct your own due diligence and come to your own conclusions. If you don’t understand the risk or how to use crypto then it’s likely best to not use them.