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MGI, ODL, Bitso and a theory about the price


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I think it's a bit presumptious to think that your opinion is desired by others, no?  Maybe leave this thread if you don't like it.  It's not what you're saying, it's the rude way in which you are say

Even tho Molten has bowed out, I'm guessing a few "ODL Watchers" remain here with me, and remain interested... With the BS/Bitso trade activities I've been monitoring all these months, I'm noting

Just FYI: December is starting to look interesting from the ODL traffic point of view. These numbers should not be taken too seriously as some might not be ODL directly, but the trend is very pos

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18 hours ago, Moonraker said:

Have you been living under a rock for the past 2 years or perhaps you’re oblivious to the number of times the price has steadily gone up and come back down just as fast if not faster?

Jeeze, even your useless TA charts that God knows how much time and effort you’ve put into clearly shows the price going up and coming back down. These silly charts have shown give or take a 5 cents movement either side of 0.30 for the past year or so and there’s absolutely no signs of this changing in the near future.

Give it a rest, sit back for 4 or 5 years and see how this pans out rather than wasting your time with silly posts like these as they’re not fooling anyone other than yourself.

It is always interesting and intellectually stimulating to deduce what's behind the behavior of XRP.    It does not mean we pin all our hopes and dreams on it's success.  I would say  that you are too  quick to criticize the intentions behind the hard work (thanks guys !.. really appreciate your efforts !)  put out by all the TA chartists here. To be sure we are all wanting our investment to do well.. but you'd be mistaken to think that's the only thing we're rooting for..  For myself, I'm rooting for a new age in how people perceive value and transfer it freely.. that is ultimately my main purpose for  investing in XRP.

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On 10/19/2019 at 11:55 AM, Molten said:

Agree, we shall see.

I guess, to out my thought succinctly, what if Ripple has identified a rising price of XRP as a key and necessary feature that enables it to work?

They would be compelled to help support the price not for their own financial gain but for the very utility of XRP.

 

Ripple has always said that a component of liquidity has been a higher XRP price. A higher price has always been necessary for xRapid to work with a good user experience.

If anything, I think they have recently ramped up their efforts to encourage a higher price. 

Ripple has always said they want XRP price to go up but that they have had trouble pinning down what drives the price. This has always been a point of frustration with them to some degree.

So between them reducing their sales, and the items that you have mentioned, I think they are now working harder to try to get the price to go up.

Again, them wanting the price to go up is nothing new, I think they are now trying a new stronger a approach to make that happen after realizing that their current methods have not been working as well as hoped. (Without just manipulating the price of course.)

Edited by AlejoMoreno
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On 10/19/2019 at 7:49 AM, Molten said:

OK, so please indulge me for a minute here.  Those of you that have put up with me on this board probably know I'm not much of a conjecture guy... to the point of being kind of a curmudgeon when it comes to speculation.  I prefer verifiable facts.  However, something occurred to me while I was on my morning jog and the seeds were planted by @dr_ed,@Julian_Williams, @Mpolnet , @Tinyaccount and others.  I want to run this by all of the excellent minds on this forum for input.

So, my theory, starting with facts:

1)  Ripple purchases a stake in MoneyGram in June, presumably as a means to jumpstart in earnest the usage of xRapid (now On Demand Liquidity = ODL) to the Latin American corridor.

2)  Fast forward a few months, and MGI's CEO is making glowing comments about the use of XRP in their transfers and the price of MGI's stock starts to rise.  This coincides with rising liquidity on the BItso Index that we have been tracking here.

3)  Fast forward to this week, and Ripple announces that they have invested in Bitso and placed a member on the executive board.

Now, the important question: why did they do this?  This is where a bit of speculation comes in.  I don't think they invested in Bitso because they saw a really good investment opportunity.  I think they have essentially told us the answer: they need more liquidity.

I think that MGI is ramping up the usage of ODL and it probably has become clear that the main limitation of continued growth is liquidity.  In other words, somebody needs to be on the other end of the trade to purchase the XRP in pesos, rial, whatever local currency. 

So, they will probably use their new position on the Bitso board to try to ramp up their customers, advertise, etc.  But what would be the most important and crucial component to enticing someone to purchase XRP and support ODL's liquidity?  Perceived value.  Namely, a rising price. 

Is it coincidence that the price of XRP has been rising steadily for the past month, in a way that we have really never seen?  There seems to be a rising floor underneath us that we haven't ever had before... XRP wants to go up.  Ripple has radically reduced their sales of XRP. 

Is it possible that we are seeing utility based growth?  That Ripple is now trying to engineer the price north to entice buyers?  The behavior of XRP has changed in the past month or so and I'm not so certain that all of these things are coincidental.

Thoughts? 

@Molten thanks for the shout out and starting this thread, hopefully it'll stay on track (sorry for the late reply). I agree with your thesis that we're at the starting point of potentially seeing ODL contribute to XRP price however, I don't think this has been the primary factor behind the steady price increase these last few weeks (I'm sure you and others will agree). However, the counter argument to this (in my view) is two fold. We have seen a rise in liquidity and XRP utilization for payments in the XRP/MXN corridor, which has been increasing 5x increase Quarter over Quarter per the last Ripple quarterly report (which has at the very least given us $8M - $10M in true liquidity). This coupled with the fact that Ripple has slowed their quarterly sales (thus reducing or limiting downward price pressure), which translates to having their customers buy XRP on open exchanges (increasing upwards price pressure) is potentially contributing to the steady price increase.

Personally, I see this playing out on multiple fronts and is pure speculation on my part on how the market will function. As liquidity and XRP usage in various corridors starts to rise this will lead to existing Ripple customers continuing to buy XRP off of open exchanges, which will create upwards price pressure. In the Anthony Pomp interview (if I recall correctly) Brad mentioned that some of their customers are hedge funds that buy XRP from Ripple to act as market makers. So, as these markets start maturing and gaining substantial liquidity these market makers will enter those markets helping to create more efficient spreads between XRP/Fiat in each respective corridor. Ripple confirmed in their Q3 report that the Logos team is working to help open more ODL corridors with exchange interrogation. This will help fuel ODL liquidity and potentially lead to FOMO from existing clients and hopefully attract new clients to either 1) buy and speculate on XRP or 2) buy and make markets with XRP (which seems to be a large business opportunity in and of itself).  

I think the next fiat corridors we'll see developments in are Philippines, South Africa, Argentina, Brazil, Thailand, and Japan. Potentially Singapore depending on if Binance opts in to become an ODL provider given their existing foothold in the Singapore market with a Fiat on ramp option. I think it makes sense to start in inefficient corridors where there's a lot of overlap with existing customers as this could potential increase the speed at which liquidity in that corridor gets built out. On ledger stablecoins could help fuel exponential growth of ODL volume as it will help remove the price volatility (hopefully making spreads more efficient) while creating demand for the underlying XRP asset. 

Long story short, I don't think we're there yet but I think the increase in ODL liquidity coupled with less selling pressure from Ripple (therefore more buying pressure from existing customers) could be the reason we're seeing a reversal in price movement.

EDIT: Adding in the quote below from the Ripple Insights article titled "Blockchain Innovation: Opportunities, Challenges and Policy Implications" to support my above point regarding deeper liquidity attracting more market makers (link below the quote):

"It is important to remember that digital asset markets are still in a relatively nascent stage, and driven predominantly by speculators. All market participants, but especially larger institutional players, want to trade in deeper liquidity pools. As the industry matures and more robust financial products are developed for digital assets, including hedging instruments such as futures and derivatives, we will see new entrants into the ecosystem."

https://www.ripple.com/insights/blockchain-innovation-opportunities-challenges-and-policy-implications/

Edited by Mpolnet
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And speaking of speculators, it looks like China might be joining the party a little bit:

https://coinmarketcap.com/currencies/qcash/

About QCash

Qcash is a stablecoin that aims to mirror the value of the CNY(Chinese Yuan). The idea was to create a stable cryptocurrency that can be used like digital CNY. The price of 1 Qcash is 1 CNY. Users can use 1 CNY to buy 1 QC and then use QC to trade cryptoassets.

https://coinmarketcap.com/exchanges/zb-com/

About ZB.COM

ZB Group’s flagship platform is ZB.com, a digital asset exchange. The platform launched in early 2013 and has a sizeable trading community. ZB.com differentiates itself through its highly curated listing process and rare launchpad offers. Deep liquidity, low fees and a dashboard featuring professional-grade trading tools are all key components to the ZB.com platform

Chart is from CoinMarketCap

image.thumb.png.cc52571c5385c54a4455ee2e3dea3a4d.png

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Today is the perfect example of how far we are from ODL liquidity contributing to positive price action. XRP price rapidly declined (in line with BTC and the rest of the market) yet we've reached our highest levels of liquidity. Goes to show that liquidity is continuously ramping up even during price declines and that the market is still extremely irrational. Assuming that ODL will positively impact XRP prices, coupled with an irrational market where prices movements are in tandem with unrelated assets, this to me represents a contrarian buying opportunity (if you agree with these two key points). 

My hope is that more liquidity will decouple XRP price action from the rest of the market, which hopefully leads to upwards price pressure. Only time will tell but I think we're at least 18-24 months out before seeing ODL affecting price. 

image.thumb.png.f5423a8261d9fffea6357ca5f426609d.png

Edited by Mpolnet
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On 10/19/2019 at 4:55 PM, Molten said:

Agree, we shall see.

I guess, to out my thought succinctly, what if Ripple has identified a rising price of XRP as a key and necessary feature that enables it to work?

They would be compelled to help support the price not for their own financial gain but for the very utility of XRP.

 

Some people have been saying this for a while. It would be great if true. But if the price is always rising will hodlers not continue to hodl and even increase their holdings therby reducing liquidity.

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5 hours ago, swift_post said:

Some people have been saying this for a while. It would be great if true. But if the price is always rising will hodlers not continue to hodl and even increase their holdings therby reducing liquidity.

I believe it is true.  In fact I think it’s bloody obvious.  But as to your liquidity crises question...  zero need to worry about that.  
 

Three reasons, first is because although the trend may be up,  there will always be fluctuations and people buy and sell because of and to take advantage of them.  But secondly and more importantly there is the escrow.  Ripple have the capacity to ease a liquidity crises at any time by releasing more of its escrow.  And thirdly...  liquidity is a function of number for sale and price.  So as price rises the liquidity improves naturally.  Really a liquidity crises because of increasing holding is not going to be a problem for long...  and it’s the kind of problem I wish we had.  :) 

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  • 2 weeks later...

I've recently been rooting around examining the raw Bitso volume metrics for the XRP->MXN trades, down to hourly granularity.

This exchange, at this point in time, is potentially the birthplace of what we all hope will become a global transformation in the means and movement of value. ( The Digital Money Age, perhaps someday they'll dub it? )

So in a way, this is a live proof of concept taking root, and from all appearances working as designed. 

So, for us spectators, watching and cheering from the bleacher seats, what are the clues to watch out for ?

For starters, we have tenitoshi's mystery Liquidity Index, and the 7d volume metrics on Bitso's website. 

I'm taking a shot at charting out the XRP to MXN trading patterns, and seeking other ideas and suggestions. I will post a few charts in a new thread soon - can any veterans here suggest the best topic/forum for this new thread ? 

Cheers, and nice ta meet y'all :) 

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11 hours ago, Ryyy20 said:

https://www.google.com/amp/s/blog.coinmarketcap.com/2019/08/30/updated-ranking-methodology-new-liquidity-metric-soon/amp/

 

With liquidity ramping up, this is starting to look interesting...Liquidity-based metrics will be launched on November 12, 2019

Very nice, it will be interesting to see those. I will keep an eye out. Thank you for sharing.

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On 10/19/2019 at 7:49 AM, Molten said:

I think that MGI is ramping up the usage of ODL and it probably has become clear that the main limitation of continued growth is liquidity.  In other words, somebody needs to be on the other end of the trade to purchase the XRP in pesos, rial, whatever local currency. 

So, they will probably use their new position on the Bitso board to try to ramp up their customers, advertise, etc.  But what would be the most important and crucial component to enticing someone to purchase XRP and support ODL's liquidity?  Perceived value.  Namely, a rising price.

Hi @Molten I like your theory, and I'll postulate that any large-scale buy/run-up on the part of traders will be timed to coincide with their perceived anticipation of more ODL corridors being added, along with an eye towards selling at the beginning of the year 2020.

At least that's what I would do if I were a whale - that way you can take profits and not pay taxes until 2021, leaving you profits to play with all year (unless you're paying quarterlies). That's what I am guessing happened in the 2017-2018 end of year run-up/first of the year sell-off.

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This utility scan is a more direct vol tracker and it is showing another 2 million plus day - it seems to have been switched off for Swell and switched on at twice the vol of pre Swell.  Ramping up is happening at a faster rate, as if they have done their tests using Moneygram facilities and are now pushing up the vol they are putting through the corridor.  (As DS said)

 

Screenshot_2019-11-10 RealTime XRP On Demand Liquidity Tracker.png

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