Ripple publishes the quarterly XRP market report to voluntarily provide transparency and regular updates of the company’s views on the state of crypto in general, including the XRP market, such as:
As an XRP owner, Ripple believes that proactive communication and transparency are part of being a responsible stakeholder. Additionally, Ripple urges others in the industry to build trust, encourage open communication, and raise the bar across the industry.
There was no shortage of events that reportedly contributed to market volatility in the second quarter – specifically ransomware attacks, environmental concerns, Elon Musk’s tweets, and regulatory scrutiny. The second quarter of 2021 saw a significant increase in crypto market capitalization, followed by a steady decline. During the larger market period, which lasted 396 days (February 2020 – April 2021), the total crypto market capitalization increased 15x. However, from April 22nd, prices eventually dropped by over 20%.
Some countries have taken extensive measures to strongly support or denounce the use of cryptocurrencies. On the one hand, El Salvador has passed a law making Bitcoin legal tender, making it the first country to do so. On the flip side, Chinese regulators have reportedly shut down mining operations across the country, citing environmental concerns and tightened restrictions on financial institutions in providing crypto-related services. These measures resulted in a drop in hashrate and heightened bearish sentiment.
Although the jury has not yet decided whether “price follows hashrate” or “hashrate follows price”, there is a correlation between the two. During the recent bear market, Bitcoin’s hashrate fell 50% from its highs, which correlated with the decline in Bitcoin price over the reporting period.
Finally, the markets were also hit by growing fears of inflation. In June alone, the US consumer price index rose 5.4%, the largest monthly increase since August 2008.
The state of regulatory clarity
Last quarter, the UK’s Financial Conduct Authority extended its end date of a temporary licensing regime for existing crypto companies to March 2022. The extension will allow crypto firms to operate while the regulator continues to review and approve applications. Similarly, several top crypto players in Singapore have been operating under a grace period, while license applications are processed under a clear licensing regime by the Monetary Authority of Singapore.
Meanwhile, in the US, many pointed to the need for consumer protection and clarity to promote healthy markets, but regulators continued to fail to provide clear guidance to market participants as the popularity of cryptocurrencies skyrocketed.
Update on the SEC lawsuit against Ripple
The case is in the detection phase – the process of information sharing, including documents and testimony. The fact-finding is currently expected to be completed on August 31, followed by an expert investigation, which is expected to be completed on October 15, 2021. Ripple defied the SEC’s request to extend these dates 60 days beyond the original deadlines and will continue to do everything possible to move the case forward as soon as possible.
The most important milestones in the second quarter include:
- The court agreed – for the third time – that Ripple is entitled to certain internal SEC documents.
- The court denied the SEC’s motion to grant her access to Ripple’s privileged communications with her attorneys. The court found that the correct focus of Ripple’s “fair notice defense” is on “the SEC’s failure to adequately inform the market of the state of mind of the commission as to whether XRP qualifies as a security”. You can find the judge’s full opinion here.
Disciplined, responsible stakeholders: Q2 Sales and Purchasing
For the most recent quarter, Ripple’s total XRP sales, net of purchases, were $ 157.92 million, compared to $ 150.34 million ($ 150.34 million) in the previous quarter. Ripple continued to engage in sales to improve the on-demand liquidity (ODL) experience of certain customers, eliminate the need for pre-financing on exchanges, and enable instant global payments.
Ripple’s total revenue after purchases ended the quarter at 4 bps, or 0.04% of global XRP volume, according to CryptoCompare TopTier (CCTT) volume. This contrasts with the total revenue in the previous quarter of 7 bps according to the CCTT.
|Sales summary (Dollars to millions)||Q1 2021||Q2 2021|
|Total ODL-related sales *||150.34||157.92|
|sales (less purchases)||150.34||157.92|
|Global XRP volume||Q1 2021||Q2 2021|
|ADV XRP (Dollars to millions)||2,264.26||4,492.16|
|Total XRP volume (in billion dollars) **||203.78||408.80|
|Net sales in% of total volume||0.07%||0.04%|
* ODL-related sales include OTC and XRP sales in support of ODL (including line of credit) and key infrastructure partners.
** Note: The numbers were compiled using the CryptoCompare API for TopTier Daily Aggregate Volumes, which reflect the total XRP volume in dollars from exchanges that CryptoCompare lists in the TopTier. Ripple continues to rate its benchmarks in the face of challenges like fake volume that persist in the industry.
Certain wallets used for XRP sales also offer short term leases for market makers. This is worth noting as they are often mistakenly interpreted as sales by market participants. The leases will ultimately be returned to Ripple. The total outstanding leases amounted to 57.7 million XRP in the second quarter of 2021.
The daily volume reported by CCTT for XRP increased significantly in the 2nd quarter of 2021 compared to the 1st quarter of 2021. Average daily volume doubled to $ 4.49 billion in the second quarter from $ 2.26 billion in the previous quarter. In particular, XRP volume saw four of the highest volume days ever recorded.
The standard deviation of XRP’s daily returns in the second quarter was 11.5% and was more volatile than BTC (5.0%) and ETH (7.3%), mainly due to the volatility of XRP in early April.
In the second quarter of 2021, in accordance with the previous quarters and the official escrow agreement, three billion XRP were released from the escrow account (one billion per month). A total of 2.7 billion XRP were returned and then transferred to new trust agreements during the quarter. Further information on the fiduciary procedure can be found here. Note: All numbers are based on transactions that occurred during the quarter.
Update of the XRP market infrastructure and liquidity
Last quarter, Swissborg, a blockchain-based platform, launched an XRP smart yield wallet that allows holders to generate returns with XRP, just like with Bitcoin, ETH and other cryptos. In addition, Swissborg has listed XRP to enable its owners to trade XRP with 16 crypto and 15 fiat currencies. Finally, the owners of the crypto trading platform Liquid can earn returns on XRP through Liquid Earn.
As Swissborg, Liquid, and other third party vendors incorporate XRP into their offerings, these integrations contribute to healthy XRP markets.
A tokenized future
The widespread use of digital assets to represent ownership of assets on a blockchain – or tokenization – is changing the way people buy, sell, track, and manage assets of all kinds, from art and real estate to intellectual property, stocks, and more Supply chain goods. With over 5,000 tokens issued since its inception, the XRP Ledger has been designed with a decentralized exchange and features to handle all types of currencies or assets efficiently, sustainably and inexpensively.
RippleX Eyes NFTs
Ripple announced its investment in Mintable, an NFT marketplace that enables users to seamlessly create, buy and sell digital items using fiat or cryptocurrency. NFTs have the long-term potential to accelerate the creator economy, inspire new business models, and open access to broader participation in the modern financial system. The gaming industry is ahead of the curve. In 2020 alone, gambling consumers spent a total of $ 54 billion on virtual goods to own, trade and sell – and this is just the beginning. With plans for XRP ledger integration, Mintable is unlocking the mass adoption of crypto by consumers, enabling it to mint, buy, and transfer potentially billions of NFTs in a sustainable and cost-effective manner. In addition, RippleX proposed a functionality that offers improved NFT support on the XRP ledger at a lower cost and allows developers to take advantage of the auction functionality on its decentralized exchange.
RippleNet prepares companies for crypto
With Europe remaining a key market, Ripple announced the appointment of Sendi Young as Managing Director for Europe. A quarter of Ripple’s current customers are based in Europe, and since the start of the year, European ODL transactions have grown by 250% compared to 2020, which is over 40% of all ODL transactions so far this year.
Additionally, APAC continues to do well with the announcement that Novatti is using ODL for instant, cross-border payments that focus on transfers between Australia and the Philippines through the country’s largest Philippine-owned non-bank remittance service provider, iRemit.