A recently surfaced paper predicts a rise in the price of XRP to a bold $1,000, taking into account a daily cross-border payment volume of $1 trillion.
XRP’s utility in cross-border payments, particularly when used in Ripple’s On-Demand Liquidity product (now Ripple Payments), has contributed to the bullish sentiment surrounding the cryptocurrency among market participants.
Usefulness of XRP in cross-border payments
This utility has attracted the attention of multiple payment entities over the years. Last December, a report from JPMorgan mentioned Ripple and XRP as entities that could help unlock the $120 billion trapped in cross-border payments. Even Crypto Basic revealed in November 2023 Grayscale highlighted XRP as a potential alternative to SWIFT in cross-border deals.
Furthermore, The American Institute of PhysicsTHE IMF and the World Bank has also highlighted XRP’s usefulness in cross-border payments in several reports. Interestingly, SEC Chairman Gary Gensler also previously recognized The advantages of XRP for use in cross-border payments over traditional fiat currencies.
With this utility recognized by the general public, investors believe that XRP is hugely undervalued, predicting an imminent price explosion, especially in the wake of the growth of the cross-border payments industry. Citing the Bank of EnglandRipple noted in its New Value Report 2023 that the cross-border payments industry could reach a volume of $250 trillion in the next three years.
With this prediction expected to come to fruition, experts say XRP is expected to rise well above its current price of less than $1 if it can capture a fraction of this volume. Mason Versus, a figure in the XRP community and founder of Gold Squad, presented last August a sheet of hypothetical pricing requirements for different volumes of cross-border payments.
An argument in favor of an XRP price of $1,000
Market analyst EGRAG recently drew attention to the document, giving credence to its contents. In the sheet, the analysis evaluates what the price of XRP should be for XRP to accommodate different daily cross-border payment volumes.
The $XRP liquidity cheat sheet 🤫 pic.twitter.com/YBY3AF7ClJ
— MASON VERSLUIS (@MasonVersluis) May 21, 2023
At prices between $100 and $500, XRP could sufficiently handle $1 trillion in daily payment volumes, but this price becomes less feasible at volumes between $6 and $20 trillion. This is because the circulating supply of XRP of 55 billion would not be sufficient for the amount of XRP tokens needed to handle these volumes.
We remember the financial expert Shannon Thorpe earlier supported that XRP would be undervalued at $500 if it blocked a portion of the expected $250 trillion in cross-border payment volume.
Versluis’ paper proposes that XRP can sufficiently handle daily payment volumes ranging from $1 trillion to $20 trillion only if its price is at least $1,000. At a price of $1,000, the market is expected to move 1 billion XRP tokens to represent $1 trillion in volume and 20 billion tokens for $20 trillion in volume.
For XRP to reach a price of $1,000, it would need to skyrocket a whopping 188.543% from its current value of $0.5301. Given that this price could push XRP’s market capitalization to an unimaginable $55 trillion, some industry commentators have expressed strong doubts.
Furthermore, some have pointed out that a daily cross-border volume of $1 trillion represents a difficult task for XRP in the next decade and beyond. For context, the entire global cross-border volume was standing to $150 trillion in 2022, representing an average volume of $410 billion per day. A volume of $1 trillion would be more than double this figure.