The Coronavirus (COVID-19) crisis seems to have reached a peak. Reports show that new cases and deaths in western countries are slowing down or starting to fall. As it negatively affected cryptocurrencies in the past, the good news are showing a positive effect on the market.
As one of the largest cryptocurrencies in the world, XRP seems to be growing and expanding. The entire crypto market is registering gains in the last 7 days. This is good for XRP traders and investors that want to see their funds grow over time. At the time of writing this article, XRP has a price of $0.19 and a valuation of $8.39 billion.
The cryptocurrency market seems to be turning bullish. That means that we could expect a positive trend in the coming weeks. This positive sentiment among traders and investors could be supported by the Bitcoin halving narrative.
COVID-19 Updates – Virus Expansion Slowing Down
Although the total numbers of total infected individuals continue to grow, the expansion of the virus seems to be slowing. This is very positive for financial markets, and consequently to virtual currencies. Knowing that the lockdowns are having a positive impact, we might see an economic recovery in the coming months.
Although it may take some time before a relaxation of the lockdown policies implemented by governments, the trend is changing. As investors were migrating from risk-on assets to safe-haven investments, we may see the contrary happen in the future. However, the negative effects on the economy of the lockdown would certainly limit the potential growth of cryptocurrencies.
Millions of individuals around the world lost their jobs. Many others are in a situation that is not so clear for them. This is clearly affecting the entire economy, which will see the GDPs of major economies massively fall. Some experts consider that this is going to be the hardest crisis since WW2.
The current situation seems to be good for the cryptocurrency market. However, we need to take into account the effect of the COVID-19 crisis on the economy. Consumption and investment were two of the largest sectors harmed by the current pandemic.
Cryptocurrencies as Risk-on Assets
As mentioned before, cryptocurrencies were working as risk-on assets. Indeed, the entire crypto market massively fell as financial markets plummetted. This shows that investors were searching for safe-havens.
XRP, as the third-largest cryptocurrency in the world, reached its lowest point since early 2017. This was certainly not good for investors. Many supposed this crisis was an opportunity for digital assets to show they were going to work as a store-of-value.
XRP Investment – Understanding Fundamentals
XRP investors are now thinking about the future of this virtual currency. The charts don’t look good but fundamentals analysis could help us understand what could happen during this year.
We need to take into account three things:
- COVID-19 crisis and its effect on the real economy
- Bitcoin halving event
- Reduction of XRP sells by Ripple
Regarding the COVID-19 crisis, as we mentioned before, we need to wait to see the impact on cryptocurrencies. We must know several millions of investors lost their jobs. This could have a negative impact on future investments in XRP and the entire crypto market.
If the economy recovers, by the end of the current year we could have new users entering the market. Funds could start flowing in again and help XRP remain above key price levels.
The Bitcoin halving event is perhaps the most anticipated thing this year. Users and crypto enthusiasts are waiting for it to see how this could affect their investments. A lower new issuance of BTC could have positive effects if demand grows in the market. There will only be 21 million BTC in existence and only 6.25 BTC will be created per block.
This could have a positive effect not only on the price of Bitcoin but also in other cryptocurrencies. When Bitcoin grows, other virtual currencies tend to follow. One of the reasons behind this could be related to BTC holders moving their high-value BTC to low-value altcoins.
Finally, the reduction of XRP sells is a very important thing for the Ripple community. Ripple has been selling large amounts of XRP to the market in order to fund its operations. This has affected the price of XRP that fell from a massive $3.75 in January 2018 to $0.13 in mid-March this year.
Without the massive sells of XRP, the current price of the third-largest cryptocurrency should be more resilient. Individuals and investors should pay close attention to the amounts of XRP released to the market. If the demand for the asset grows, Ripple may have more possibilities to sell. If demand remains stable, Ripple could reduce the number of XRP sold.