Ripple CTO Explains Why RLUSD Can Hit Whopping $1,200 At Launch, Warns Investors Not To FOMO
Ripple CTO David Schwartz has outlined how the companys upcoming US dollar-pegged stablecoin, RLUSD, could initially trade at insanely high prices, possibly even $1,200, despite being designed to maintain a 1:1 parity with the US dollar.
He stressed early supply bottlenecks and speculative enthusiasm as key factors likely to cause any short-lived spike. Schwartz then warned investors against seeing the much-hyped token as an opportunity to bag life-changing profits.
Why RLUSD May Be Priced At More Than $1
David Schwartz said in a lengthy Dec. 15 X post that he anticipates high volatility for RLUSD immediately after its debut, with a handful of huge orders for the stablecoin as some buyers are willing to pay way over the $1 price target.
Schwartz indicated that some of these initial pre-market bids for the RLUSD stablecoin, which is currently unreleased, artificially inflated its value before its official launch.
The statement came after a crypto community member spotted RLUSD being priced at 511 XRP (around $1,231) per unit on the Xaman trading platform, way above its intended $1 peg.
There actually is someone willing to pay $1,200/RLUSD for a tiny fraction of one RLUSD, the Ripple CTO wrote.
According to Schwartz, the bid looked as though excited buyers wanted to claim the honor of purchasing the first units of RLUSD to get to the market.
However, he said such inflated valuations would be short-lived, assuring that the price will come back to very close to $1 as soon as supply stabilizes. If it doesnt, something is very seriously wrong.
Wen RLUSD Launch?
In August, Ripple announced that it had started testing its new stablecoin on XRP Ledger (XRPL) and Ethereum mainnet. Once RLUSD is launched, Ripple intends to utilize both RLUSD and the XRP cryptocurrency to provide cross-border payment solutions to its global customers.
As ZyCrypto reported, the stablecoin received its final greenlit from the New York State Department of Financial Services (NYDFS) on Dec. 11. But Ripple is yet to announce when RLUSD will be officially released to the market.
Schwartz explained the market forces at play, highlighting the role of arbitragers in swiftly stabilizing RLUSDs price. Arbitrages are expected to quickly normalize RLUSDs value by selling at inflated prices and purchasing at or below $1, equalizing supply and demand.
In conclusion, Schwartz reminded buyers of a stablecoins primary purpose: to have a stable price, not to be a speculative asset for making quick profits.
Please dont FOMO into a stablecoin! This is not an opportunity to get rich, he quipped.
That being said, XRP rocketed to a seven-year high earlier this month, hitting $2.74 the highest price since January 2018. The fourth-largest crypto by market cap is down 1.1% over the last 24 hours, changing hands for $2.44 as of press time, Coingecko data shows.
Text source: ZyCrypto
