Chad Steingraber, a well-known XRP community commentator, has suggested that when it’s time to push XRP to higher prices, it won’t take as much money as many think.
Steingraber said this on the back of the recent crypto market flash crash, which some market pundits have attributed to manipulation. For context, the broader crypto market slumped on Friday, Oct. 10, at a fast pace within hours, leading to panic and massive liquidations.
XRP Witnesses Flash Crash
Specifically, the total crypto market cap dropped from $4.09 trillion at 12 PM yesterday to $3.3 trillion by 9 PM (UTC). This represented a loss of nearly $800 billion within nine hours, marking one of the steepest drops in the crypto market’s history.
While Bitcoin slumped from $121,000 to $109,683 during this crash, XRP saw steeper losses, collapsing from $2.81 to $1.5, a massive 47% drop in nine hours. The market has since recovered from the steep crash, but prices are still down at press time, with BTC trading for $112,000 and XRP changing hands at $2.4.
It Won’t Take Much Money to “Ride XRP to Infinity”
Interestingly, in his latest commentary, Steingraber chose to see the bright side of the recent bearish event. The market commentator claimed that the event triggered the largest XRP long liquidation in history, worth about $422 million. However, he found an interesting development surrounding exchange flows.
Steingraber claimed that XRP’s market cap dropped by a massive $100 billion during the flash crash, as he identified a bottom of $1.17. However, he suggested that the market cap recovered the lost $100 billion on the back of a minor wave of exchange inflows.
Taking this development into account, Steingraber pointed out how it takes minor inflows for XRP’s market cap to increase by a massive scale, a typical impact of the market cap multiplier effect often teased by community pundits. According to Steingraber, when it’s time to push XRP to higher prices, the market will not need as much capital influx as most people believe.
Points to Consider
Now, while Steingraber’s central point is perfectly accurate, as the capital influx required to push XRP to higher prices may be much lower than most expect, the context in which he made the point is particularly flawed.
For context, exchange inflows do not actually translate to capital inflows. Specifically, exchange inflows refer to assets deposited by market participants into centralized exchanges. These inflows often spike when investors are looking for an avenue to sell off their tokens. In contrast, they often pull their assets out of exchanges when planning to HODL for long in cold storage.
As a result, conflating exchange inflows with capital inflows is inherently flawed. Instead, the metric that accurately measures capital influx is the spot Cumulative Volume Delta (CVD). Notably, this indicator tracks the difference between the sell volume and buy volume of an asset on a particular exchange.
Interestingly, data from the Bitstamp, Coinbase, Binance, and Upbit CVDs indicate that XRP only saw around $118 million in buy volume during the time its price recovered following the crash. This confirms Steingraber’s suggestion that minor capital inflows are capable of pushing its market cap higher.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
