Ripple publishes the quarterly XRP market report to voluntarily provide transparency and regular updates of the company’s views on the state of the XRP market, including quarterly programmatic and institutional sales updates, relevant XRP-related announcements such as Xpring and RippleNet partnerships, and comments on the previous quarter Market developments. As an XRP owner, Ripple believes that proactive communication is part of being a responsible stakeholder. Additionally, Ripple urges others in the industry to follow suit to build trust, encourage open communication, and raise the bar across the industry.
Market snapshot: crypto as a safe haven asset class
Since the advent of Bitcoin, digital assets have often been referred to as safe havens, or assets that market participants can turn to during the turmoil in financial markets because they are unlikely to correlate with traditional markets. Emerging from the 2008 financial crisis, digital assets are putting the safe haven label to the test. That should change on March 12th, 2020, or what some call “Black Thursday”.
In the days leading up to Black Thursday, digital assets kicked off the week with gold and trading as a safe haven as stock markets saw the start of the COVID panic. However, when the S&P fell below 3,000 on Black Thursday, unprecedented volatility spread across the digital asset markets. Bitcoin (BTC) saw the largest one-day move ever, losing over 50% of its market value in a matter of hours – a decline accelerated by liquidations worth billions of dollars on leveraged derivatives and lending platforms.
As digital asset owners rushed to transfer digital assets to either meet margin calls, sell their positions, or take advantage of price changes, the BTC and Ethereum (ETH) networks became overwhelmed and suffered from performance issues. According to Coin MetricsThe average transaction fees in US dollars for Bitcoin and Ethereum have increased almost fivefold. “ While the entire crypto market, including XRP, was volatile, the XRL ledger (XRPL) performance such as transaction prices and speed remained stable, making XRP the preferred digital asset for money transfer.
Five weeks fast forward, and as of April 17, 2020, the S&P 500 is down 11% yoy, WTI crude oil by nearly 70% since the start of the year, the price of gold by 10% and market capitalization for crypto by 7, 3%. Given the recession and ongoing uncertainty about the extent of the long-term economic impact this global crisis will have, we expect continued market volatility and an ongoing test for crypto to determine whether it is a “safe haven” asset class.
Disciplined, Responsible Stakeholders: Continuing the break in programmatic XRP sales
As readers may recall, in Q2 2019, Ripple switched to a more conservative volume benchmark for XRP sales, away from CoinMarketCap and CryptoCompare Top Tier (CCTT), and reduced XRP sales significantly. In Q3 2019 and Q4 2019, Ripple further reduced XRP sales and paused programmatic sales. Ripple has kept this approach throughout the first quarter of 2020.
For the first quarter of 2020, total XRP revenue was $ 1.75 million ($ 1.75 million, compared to $ 13.08 million in the previous quarter. Additionally, Ripple continued the pause in programmatic selling, focusing solely on over-the-counter (OTC) sales to build XRP utility and liquidity in strategic regions such as EMEA and Asia. Total sales (Only OTC with programmatic pause) ended the quarter with 0.6 basis points CCTT. This is compared to total revenue in the previous quarter (OTC + programmatic) of 8 basis points CCTT, which corresponds to a decrease in QoQ of 99.3%.
|Sales overview (Dollars to millions)||Q4 2019||Q1 2020|
|Institutional direct sales (OTC)||08/13||1.75|
|Global XRP volume||Q4 2019||Q1 2020|
|ADV XRP (Dollars to millions)||187.34||322.66|
|Total XRP volume (Billion dollars)||17.24||29.68|
|Total sales in% of the total volume||0.08% *||0.006% *|
* Percentage is calculated by dividing actual Ripple Dollar Revenue by the total reported XRP Volume in Dollars.
Note: In the fourth quarter, effective as of the first quarter of 2020, CCTT changed the method used to determine which exchanges are listed in the TopTier. This is reflected in the numbers above. CryptoCompare has not retrospectively updated its data for the change. Ripple continues to evaluate its benchmarks in the face of challenges such as false volume that persist in the industry.
The daily volume reported by CCTT for XRP increased in the first quarter of 2020 compared to the fourth quarter of 2019. Average daily volume for the first quarter was $ 322.66 million compared to $ 187.34 million in the fourth quarter and above the average daily volume reported for the third quarter of $ 198.10.
The volatility of XRP’s daily returns over the first quarter is 6.2%, which is a 3.1% increase in volatility over the fourth quarter. XRP’s volatility was higher than BTC’s (5.8%) and lower than ETH’s (7.3%) for the quarter.
Correlations with XRP
Following signs of decoupling of large capitalization digital assets, XRP’s correlations with other large capitalization digital assets rose to 100% after the market crash on Black Thursday.
In the first quarter of 2020, another three billion XRPs were released from the escrow account (one billion per month). In total, 2.7 billion XRP were returned in the quarter and then incorporated into new trust agreements. Note: All numbers are based on transactions that occurred during the quarter.
Monitoring fiduciary activity
Last quarter, Ripple re-shared the escrow details to provide clarity on the mechanics and schedule. To ensure further transparency, Ripple created @XRP_EscrowBot. This Twitter bot monitors and publishes the monthly fiduciary movements. Anyone on Twitter can follow this account to keep track of escrow activity.
As a reminder, the escrow mechanism releases a total of one billion XRPs to Ripple every month. The remaining monthly portion of the XRP will be placed in a new deed of transfer that will be released in the following months. You can find more information about Ripple’s escrow account here.
On-Demand Liquidity (ODL)
Customers continue to see the value of XRP in significant cost savings by eliminating the need to pre-fund international accounts. From Q4 2019 to Q1 2020, the transaction volume of RippleNet’s on-demand liquidity service (ODL) tripled, and the dollar value processed increased by more than 294%.
Notably, Ripple and Azimo, a UK-based digital money transfer service, have announced their partnership to leverage the digital asset XRP for cross-border payments. Azimo started its service to send payments to the Philippines and within a few months, ODL saved the company 30% to 50% in arranging money transfers between customers in the Philippines and customers in the UK and Europe.
XRP integrations and liquidity updates
As mentioned on a recent Insights blog, liquidity is key to exchanging assets. The more liquid an asset is, the more efficiently it can be exchanged. Hence, it goes without saying that XRP liquidity is the lifeblood of Ripple’s on-demand liquidity for cross-border payments.
Liquidity is not only strengthened by new use cases for XRP outside of cross-border payments, but also increased by the variety and diversity of exchange-tradable instruments. In the case of XRP, XRP was integrated into a number of additional exchanges and liquidity instruments in the first quarter.
The open source community of developers continues to develop products and support innovation on the XRPL by improving the technology. In the last quarter, Xpring introduced new tools, services and documentation for developers, including support for XRP Ledger Mainnet in the Xpring SDK and support for ILP STREAM (Interledger Protocol) on Testnet in the xpring.io wallet.
In addition, Xpring partner Anchorage announced support for XRP retention, which will allow the growing number of enterprise customers to securely store XRP for various use cases. The popular BRD wallet also announced support for XRP.
- The Monetary Authority of Singapore granted certain market participants a temporary exemption from the newly enacted license requirements under the Payment Services Act. The relief allows companies to work until July 2020. After that they have to get a license.
- The Indian Supreme Court lifted a ban on cryptocurrency activity imposed by the Reserve Bank of India in April 2018. A few days later, the RBI announced its intention to return to the Supreme Court to challenge this ruling.
- The CFTC issued interpretative guidance on “actual delivery” for retail crypto transactions that involve leverage or margins. These guidelines are another step taken by the CFTC to provide market participants with clarity about activities that fall within their remit.
- Amid the pandemic crisis, US Congress discussed creating a “digital dollar” and related accounts to speed up stimulus payments to households in need.
- SEC Commissioner Hester Peirce proposed a 3-year safe harbor period for the sale of crypto tokens. The Safe Harbor proposal relieves issuers from having to be considered when offering illegal securities.
- The Brazilian central bank announced an initiative that enables payments between private customers and companies to be processed in seconds. This initiative is part of the central bank’s overall initiative to improve open banking in Brazil.
- The messaging upgrade from SWIFT to ISO standards was delayed by a year and is now expected to be completed by 2025.
- Worldline bought Ingenico for 8.6 billion US dollars, continuing the consolidation trend among payment providers. Ripple expects the consolidation to continue in 2020 as older companies try to digitize market share and protect it from fintechs.
- Facebook changed its plans for its Libra whitepaper due to regulatory pressures and political backlash. Unsurprisingly, Facebook’s Libra project has shifted focus and will support both existing government-backed currencies and the Libra token.
- The number of crypto wallets with one bitcoin (or more) continued to rise, reaching an all-time high on March 11th.
- Binance, one of the largest cryptocurrency trading platforms, acquired CoinMarketCap.com at an undisclosed price and, in the face of criticism, reiterated its intention that the site is a neutral data provider.
- Binance and OKEx overtook BitMEX in the Bitcoin futures market last quarter when the volume on the crypto exchanges hit a record high in mid-March.