Disclaimer: All of the opinions on this blog are my own (and if you ask my wife, some of my opinions are incorrect). I do not have the ability to predict the future and my suggestions or recommendations are in no means a guarantee. I have no control over the markets or the world and I am just sharing my views on the topic at hand. Please make sure to do your own research and make your own choices. If I help you make a bunch of money, I ask that you pay it forward to someone else (or send me a bottle of nice bourbon).
One of the hot altcoins on the market right now is Ripple (XRP). It’s shot up 1,000% over the last three weeks and it has now become the second largest coin (in terms of market capitalization) surpassing Ethereum.
As I have done my initial research and the back story to Ripple is quite interesting. Most people automatically assume Ripple is a crypto coin (much like Bitcoin or Litecoin), but that’s not quite the case. It’s actually a token.
What in the hell does that mean?
A coin is something that is supposed to be an actual currency – so it’s like the nickels and dimes you have in your couch. They are meant to be used as a currency and can be used to buy and sell items all across the web (from vendors that accept such coins).
A token is more like a method of converting one currency to another. Sounds confusing right? The best example I can give is something like the tokens is a gift card.
A gift card is cash, but it isn’t. We can use it just like cash, but in the end, it’s just a piece of plastic that hold cash on it.
That’s what Ripple is. It was designed as a method to help people transfer money across borders and convert money from one currency to another.
And Ripple does it extremely fast. According to their website, they can transfer money in roughly four seconds.
So this has applications in many different settings, but it could be most popularly used as conversion mechanism to help people transfer money (or crypto coins) from one system to another instantly.
Imagine if you didn’t have to wait for a wire transfer or ACH transfer to settle at the bank. What if it was just there when it was sent?
That’s where Ripple can provide the most value.
So enough about the backstory of Ripple, let’s talk about where it is at currently and where we can expect it to be in the coming days and weeks.
The first thing to do when analyzing any coin (or token) is to look at the charts of where it has been. We are going to look at the year chart first.
We see two different colors of lines:
Green shows us the value in terms of US dollars (USD). Orange shows us the value in terms of Bitcoin (BTC).
In terms of USD, we can see the huge climb in the past few weeks from roughly $0.20 to over $2.40. That’s enough to get anyone excited right there. Bitcoin on the other hand shot up to about where it did in late May (this is pretty important as a ceiling for investors). This spike in late May sparked a little bit of interest.
With a little further research, I found that rumors of Coinbase adding Ripple as a currency on their exchange started around this time. With it becoming a major player in the crypto field, people started to buy more and more hoping it would get listed and shoot up even more.
An upward frenzy was created.
If I look back to early November, these rumors started to surface again and a similar spike in value resulted.
I’m not saying this is the major fuel to the fire, but it does stand to reason that it could be a reason behind the sudden increase in usage.
The play: If you think Ripple will get listed on Coinbase (or another major marketplace with a large user base), you might want to buy and hold until it is listed (or buy on the dip). If you don’t think it will be listed, wait until the hype dies and buy to hold and sell when the rumors start back up.
This is one angle to play on if you plan to hold for the long term (longer than a month). If you are looking for a day trade route, you might want to look at the charts below (1 month and 7 day).
Now my recommendation is going to come from the investing world, so please take it with a grain of salt and do your own research.
There seems to be a level of support at the $2 point and then a level of resistance at roughly $2.60 or $2.70. If it drops below the $2 point, you are looking at a drop to $1.50 or $1.75.
Taking all of this into account (and the current state of Bitcoin), I would play a buy at $2.05 with a sell at $2.55 – Only once the token bottoms out at the $2 mark and doesn’t fall below it and only selling if there is a dip once we hit the $2.60 mark. If it falls below the $2 mark, I would stay away from it until it hits the $1.50 mark (after support is established.
If Ripple crosses the $2.60 point, I’m not sure where it will end up. I think it will depend on the excitement and momentum of the token and the adoption of it to other marketplaces.
High goal for the end of January: $4.00 (I could see a spike even higher if a major platform like Coinbase makes an announcement).
Low goal if things go south: $0.80
Who knows. This could be the next big thing. Or a bust. Only time will tell.
Chris Wilkey (CW)