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XRP liquidity/price question

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Hi all, I'm a ripple holder looking for some clearer insight...but the more I research the more i wonder about the decline of the future xrp price. I'm newish to crypto but have traded most asset classes over time. My primary concern is this ...and I'm hoping that I'll get a flood of "no your logic is wrong" or "it doesnt work like that" ...anyway we shall see... but my thinking is .... assuming the huge liquidity that the current circulating supply offers..and also assuming the transaction speed of ripple...surely there will always be ample xrp in the pot to facilitate the fiatA-xrp-fiatB process. So why would the xrp token be in demand if there is always enough in the pot that no one needs to hold xrp themselves. Ps I hope my logic is wrong and xrp price sees huge growth. Please help me understand if my above point is a factor or if I'm way off. Thanks in advance.

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That's what I thought as well until someone explained it to me. There's currently 40 bil XRP in circulation.  Then you have to consider that out of that it's only a small percentage that is up for sale and not "hodled", say 30%, or 12 bil XRP.  Then you have to consider that this is spread out among different LPs and xRapid will use a single LP to do the purchase for each transaction. So let's make a second assumption, that the biggest LP out there provides 25% of the liquidity, so that's a maximum of 3 bil XRP on that LP.  At a price of $1 per XRP the maximum amount that can be transferred at any given time would be $3bil. It can still be done (e.g. you can transfer the money in chunks instead of 1 big transaction), but the numbers favor a higher XRP price than the one now.

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Thanks for the reply @stefanosd . Very useful to understand how i should be approaching this. Can I ask for your view on one more thing in regards to the XRP in escrow which will be released periodically..how will this affect price... presumably it will dilute price or will the escrow releases be in line with what higher liquidity is required? Where do we realistically see price in eg 5 years 10 years assuming adoption is high (as it should be ). 

Thanks again... a very clear and concise response (in a sea of " xrp will moon" and " xrp will be a $1000 sure thing" :-). 

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I can't possibly answer the second part, which is where I realistically see the price. There are just too many variables.  I'm one of those people who sold their BTC at $300 because any higher would be insane :)

As for the XRPs in escrow, I guess it does provide a safety net against Ripple dumping them in the market (although that would be catastrophic for Ripple and XRP and I doubt they would ever do this, at least not without prior major signs that we're on the titanic, or another Jed McCaleb scenario). However, again, I don't know what the measurable effect of 1bil XRP on a monthly basis is. 1 bil every month is still a lot of inflation.  Ripple sends most of it back to escrow anyway (I think last month they used like 300m).  1 bil every month is what Ripple decided would be enough for them to have flexibility, but not too much that people are fearful of dumps.  In any case, arguments of centralization are grey, i.e. both valid and invalid to some extend. You have to trust that your interests as a hodler are aligned with those of Ripple Labs. They are the biggest hodlers of XRP, so they also want to see the price go up.
 

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With the other thread currently on fire ? regarding xrapid being utilized first by money remittance providers and not banks, I would pose the question of what such a scenario would do for the liquidity and thus, the price of XRP.   JK described this scenario as low hanging fruit and I would have to concur.  The US alone sent over 580B in remittances worldwide (in 2016) with payments to México and China leading the way.  WU was the dominant method utilized.  I would call this a welcome stage to begin XRP usage.

Edited by Ripple-n-Time

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