E L Emerson
Keep a watchful eye on Ripple and Monero, who probably represent two of the more extreme examples of cryptocurrency ideology amongst the over 1,365 current trading options for altcoins.
Ripple’s increasing adoption by large traditional financial institutions, and Monero’s position as the darling of the open source community, put them at what might be described as the edges of the cryptocurrency spectrum, where the more general modus operandi is to “be all things to all men.”
These currencies have opted instead to build brand and reputation in niche areas; a natural and necessary strategy in any “new” industry, trading or market sector, where the initial generalist leaders tend to give way to those who gain strong footholds in specific audiences.
The Ripple Effect
Much attention has been paid to Ripple’s recent and albeit temporary jaunt as the second most popular cryptocurrency in the world for approximately 10 days, pushing Ethereum into 3rd place.
The company, however, is not without its challenges. It’s XRP altcoin product saw its value drop by 14% in earlier January trading (see Cryptocurrency Wars), and more recently (at the time of writing) Ripple has plunged an overall 55% down on its January 4th high of $3.84 (£2.84).
Don’t be fooled. The current problem is three-fold, and likely represents a good opportunity to take advantage of market panic and buy in cheaply.
The issue began (and continues) with the fallout from an agreement made 18 months ago by Ripple’s then CEO Chris Larsen with bank consortium R3. Larsen signed a deal that gave an option for R3 to buy 5 billion units of its currency for less than a penny. Ripple’s XRP coin value then grew from circa $200 million a year ago to an estimated $100 billion, meaning that option contract is now worth upwards of $10 billion. And Ripple’s not happy about it.
Then there was CoinMarketCap’s decision to exclude Korean prices from the displayed XRP price which, because those exchanges tend to inflate prices a bit, XRP value appeared to drop dramatically and without reason.
And finally, the panic selling started which led to the current approximate halving of Ripple XRP’s value.
But for those who see beyond the price action, those big contracts with the financial sector aren’t likely going away anytime soon. And that type of financial foundation is the closest any cryptocurrency currently comes to the equivalent of the stability of a gold or other precious metals standard, upon which its true value can be based and measured.
For those who’ve been watching, Monero has moved from it’s September 2017 $30 to $40 trading range steadily upward into its current $375 to $425 range. That’s good news.
But like most of the top cryptocurrencies, the “Silk Road” syndrome of suspicious money movements is an inconvenient and continuing truth for the fledgling altcoin market.
The Bad News
By example, it was recently revealed by cyber solutions provider Alienvault that the code for a new Monero mining bot has been found to direct its ill-gotten gains to a computer server located at Kim II Sung University in Pyongyang, North Korea.
Add in headlines about criminals dumping Bitcoin for Monero, and an Oracle WebLogic vulnerability patched back in October 2017 that has recently been exploited on machines that didn’t use it before mining for Monero, and the hits just keep coming.
Par for the Cryptocurrency Course
Sadly, this is par for the cryptocurrency course, and something savvy investors need to understand, accept and move forward from as altcoins go from Dark Web notoriety towards mainstream financial legitimacy. And after all, there’s probably far more money laundering and corruption happening on Wall Street right now than will ever pass through the cyrptocurrency market’s coffers.
To a degree, the negative news has been reflected in Monero’s price action, which was hit hard in December, dropping back about 68% in just a few days. It then topped at $475 per coin and has since been moving in a sort of triangle pattern as we saw in Ripple and Ethereum before they both broke to the upside.
And keep in mind that while just the 14th largest coin in terms of market capitalisation, that still means it has a roughly $6.6 billion value, and its popularity amongst the open source community continues apace.
As before, don’t be fooled by the temporary upsides or downsides. Look at the fundamentals, positioning and real market connections that create value in a cyrptocurrency market where most wealth standards are simply based on imaginary coins.
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