This week has been big for Ripple Coin. In a matter of days it took over Etherium as the second-largest cryptocurrency by volume. at around the same time the price of Ripple Coin went from $.14 to $.26 where it capped out before crashing hard yesterday.
Reddit’s ripple subreddit was quick to jump on the “bubble bursting”. I’m not quite so sure that that’s what happened here.
Whether you are of the opinion that cryptocurrency is or is not an investment, it is hard to dispute when the market goes through fluctuations that are reminiscent of market activity. I’m not an investment expert by any sense, but I can see patterns and trends and thought I’d share.
Ripple versus Bitcoin – the casual’s perspective
If you’re like me, you diversify your crypto, and for good reason. Cryptocurrency is so volatile that you can lose hundreds of dollars with a bad day. I’ve got a bunch of different ones I’ve picked up over time: some Litecoin, some Etherium…I even keep around a couple thousand Dogecoin just for kicks.
But watching the value of your Ripple investment versus your Bitcoin investment is such a different experience. With bitcoin, the price per coin is so high that a $1000 investment won’t be changing much as the market gains and loses dollars and cents. But that same $1000 investment in Ripple will fluctuate massively with a single cent difference.
It also makes it harder to differentiate a bubble from a normal fluctuation.
If I remember my economics class from college right, an investment bubble, or economic bubble, is defined as “an asset that greatly exceeds its intrinsic value”. It is almost always brought on by a new connection, technology, or announcement, and people get excited. They immediately boost the value of the asset as the word of the “cool new thing” gets around, and you end up with a bubble. It’s like an economic pimple.
So what happened with Ripple, then? Well, what happened was that Ripple made a connection with the major Spanish banking company BBVA to try and further their goals of being a massive banking intermediary. News got out pretty quick and next thing you know: BAM. 20+ cent ripple coin.
Here’s the thing though: Ripple Coin’s intrinsic value did increase. The connection to BBVA did affect the spendability of the currency, so yes, the value was affected.
My theory: There was a small bubble, but the trend also is shifting upward. we’re now facing a brief asset inflation and that’s driving the price down. (laymen’s terms: an anti-bubble)
Don’t panic and don’t listen to me
You seem pretty reasonable, so I don’t think you’re panicking yet anyhow. If you bought high to ride the wave and now you’re own a couple hundred dollars, that sucks but don’t be disheartened. The trend remains upward in the world of digital coinage. Be smart, don’t panic.
Most important to you, though, is don’t take my word for it. Part of the basis of cryptocurrency is the idea that you don’t need to trust others to successfully trade coinage, and in your investment decisions this is also true. do your own research and make decisions that suit your needs and your assets. Ripple is hot right now because it’s becoming legitimized on different levels than other cryptos. Be smart, be secure, invest wisely and trade carefully.