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Here’s The Real Reason Why Ripple’s XRP Has Performed The Worst Among Large-Cap Cryptos

Altcoins 2020/05/22 19:47 by Brenda Ngari
Here’s The Real Reason Why Ripple’s XRP Has Performed The Worst Among Large-Cap Cryptos

Ripple’s XRP has had a disastrous time over the last two years. In a period where other large-cap cryptocurrencies have been attempting a comeback, XRP has lagged behind significantly. As reported by ZyCrypto earlier, the digital asset emerged as the worst performer among the top 20 cryptocurrencies during the first quarter of 2020.

At $0.20, the cryptocurrency with close ties to San Francisco-based fintech firm Ripple remains stuck 94 percent below its January 2018 all-time high. Crypto data and research platform Messari recently looked under the hood in order to identify the reason why XRP has performed dismally. 

The firm observed that this could have something to do with the coin’s ballooning circulating supply which has subsequently resulted in XRP having the highest inflation rate among the large-cap cryptos.

20.5%: XRP’s Inflation Rate Is Quite Alarming

Data provided by Messari shows that there are now 20.5% more XRP in circulation this year as compared to last year. This is because XRP has an annual inflation rate of 20.5% – the highest among large-cap cryptocurrencies.

Here’s The Real Reason Why Ripple’s XRP Has Performed The Worst Among Large-Cap Cryptos

According to Messari, there are currently approximately $29.86 billion XRP tokens in circulation. This is equivalent to only 30% of XRP’s maximum supply. For comparison, 87.5% of BTC’s maximum supply is already in circulation.

However, the reason why XRP’s circulating supply is shooting up at a shocking rate is not a mystery. Ripple, the blockchain firm behind the token, unlocks $1 billion XRP at the start of every quarter. Millions of these tokens are used for growing the XRP ecosystem through strategic investments and partnerships. 

Although in reality Ripple needs to sell XRP in order to expand the token’s utility, this strategy has not been received well by most in the crypto community as they believe the constant sales inhibit the growth of XRP’s value.

Ripple has unlocked at least $5 billion XRP from the escrow so far. With $49.4 billion still locked in escrow wallets, the sales are likely to continue for the next 21 years.

How Other Large-Cap Cryptos Fared

Apart from XRP, Tezos (XTZ) is the only other major cryptocurrency with a relatively high inflation rate of 13.1%. But unlike XRP, Tezos has performed rather well in recent months with over 55% yearly gains. The coin has even cemented its position among the top ten cryptocurrencies. Most observers believe XTZ is shining due to its security model, Proof-of-Stake (PoS), which is gaining traction in the crypto industry.

Other major cryptocurrencies like Ethereum (ETH), EOS, and Litecoin (LTC) have an inflation rate of 4.7%, 2.6%, and 5.1% respectively. 

The OG cryptocurrency recently completed its third reduction in output. As such, the 12.5 BTC reward was chopped to 6.25 BTC, resulting in fewer bitcoins being minted per day. BTC’s inflation rate now stands at 3.8%, which is lower than that of gold. It is also significantly lower than XRP’s inflation rate.

Meanwhile, XRP is valued at $0.201346 at the time of publication, up 3.81 percent on the day.

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