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Ripple ODL Strategy

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On 2/19/2020 at 9:57 AM, Julian_Williams said:

4.5 million in an hour might be enough to effect price?

This is an interesting question to me. The largest spike was Feb 19, 16:00 and the price moved from roughly 0.2788 to 0.2807. That amount of change seems fairly negligible to me.

To me, the answer is starting to become more clear to the question of: will ODL volume increase the price of xrp?

ODL volume is significantly increasing but it doesn't seem like there's a direct correlation with xrp price. This is not to say that the utility won't add value to Ripple the company and XRP the asset, but ODL volume doesn't appear to immediately move xrp price (as many had thought, including myself)

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26 minutes ago, aye-epp said:

This is not to say that the utility won't add value to Ripple the company and XRP the asset, but ODL volume doesn't appear to immediately move xrp price (as many had thought, including myself)

I think it’s too early to say. 

The volume of ODL is not yet significant.  It’s growing rapidly but it is not yet a significant percentage of total volume.  

Also I think it has a lag.  Although volume will tend to support the price,  the value of a thing is a perception.   And the perception of XRP value lags behind the reality.  

But large volumes will snag mainstream attention and then ultimately,  perceptions.  

So for those, and other reasons not yet listed,  I think it’s too early to say.  

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Actually  @aye-epp on re-reading I see you said “immediately” so I spoke to the wrong topic.  Oops.  

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This concept has developed from "bridge currency" on XRPL --> to xRapid as a bridge  between RippleNet ledgers --> to the ODL rebranding, which I think clarifies the service offering. 

It's one of the most exciting concepts to come out of Ripple. Regarding  XRP Price & ODL.. the market should exhibit a yin yang behavior. As demand increases, buys will drive up price, but as price increases you need fewer XRP to transfer the value, decreasing "unit demand".

I do think XRP's value should fundamentally follow the trend line of liquidity growth, with speculation moving the price above/below that trend line.

Edited by KarmaCoverage

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12 hours ago, Tinyaccount said:

I think it’s too early to say. 

The volume of ODL is not yet significant.  It’s growing rapidly but it is not yet a significant percentage of total volume.  

This is a topic I've observed from afar. One theory is that ODL will have a direct effect on price. A second theory is that ODL will eventually will have a direct effect on price.

If it's the first, we should see immediate impact from vol in many millions - as some members state (which I disagree) that ODL will cause a steady uptick of buying pressure. This should be evident from the initial ODL usage now that it's enough to measure. This appears to not be the case and imo is clearly debunked.

If it's the second, then to me it seems more along the lines of basic supply/demand and we'll be here for many years until the xrp supply of 1B/mo isn't able to serve the demand.

Simply stated, if ODL has a direct effect on price due to buying pressure then we should have seen it by now.

Edited by aye-epp

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I think you might be mistaken in both cases.

1 hour ago, aye-epp said:

If it's the first, we should see immediate impact from vol in many millions

Not if other factors are larger.  The volume is tiny against the larger retail trading.  So even if it was an upward pressure it’s swamped by whatever the direction of retail might be at any moment.  So I don’t think it’s debunked at all.

 

1 hour ago, aye-epp said:

If it's the second, then to me it seems more along the lines of basic supply/demand and we'll be here for many years until the xrp supply of 1B/mo isn't able to serve the demand.

I believe your supply figure is totally incorrect.  in both directions...  too large and too small.  :) 

The ‘supply’ of XRP is whatever amount of XRP are available for immediate sale at the points where there is demand.  It is not the escrow release amount of 1Billion per month.  And the escrow is also not part of supply because Ripple are not selling it other than specific OTC currently.  Furthermore even if they were,  that is not the supply because it would be only one part...  as I mentioned,  the supply is whats for sale, not the amount coming newly into possible circulation.

So if demand increases Ripple have a way to control supply....   they can throttle it back,  or goose it up an additional 1Billion per month extra supply.  Presumably they will do that wisely as demand increases.

 

So since the first case is too small and you have incorrectly measured supply I think you cannot as yet say anything about whether ODL will affect price.

Howvere the situation is evolving quickly and there are indications of many new corridors and players coming soon.  So we wait and see, but maybe not for too long.

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3 hours ago, Tinyaccount said:

The ‘supply’ of XRP is whatever amount of XRP are available for immediate sale at the points where there is demand.  It is not the escrow release amount of 1Billion per month.  And the escrow is also not part of supply because Ripple are not selling it other than specific OTC currently.  Furthermore even if they were,  that is not the supply because it would be only one part...  as I mentioned,  the supply is whats for sale, not the amount coming newly into possible circulation.

This is a fair argument - I over simplified the supply/demand focusing more on availability in the ecosystem, not necessarily just trading

 

4 hours ago, Tinyaccount said:

So since the first case is too small and you have incorrectly measured supply I think you cannot as yet say anything about whether ODL will affect price.

I still question this - is it too small? What's the correct ODL volume that will tell us whether we are right or wrong? I'm not targeting you but I think many folks (possibly unknowingly) move the goal posts when in reality the question/hypothesis isn't crystal clear to begin with.

My broad point is focused on the question: does ODL volume directly and immediately increase XRP price due to the "additional buying pressure" - which I think is fair to assume the answer is no, regardless of the type of volume (likely because there's equal and opposite sell pressure within ODL).

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3 minutes ago, aye-epp said:

I still question this - is it too small?

Well it’s like 17 million per day when there is multiple billions per day traded.  So yeah.  Still too small.

4 minutes ago, aye-epp said:

My broad point is focused on the question: does ODL volume directly and immediately increase XRP price due to the "additional buying pressure"

Yeah that’s a good question...   and you seem to think the answer is in but I think we are far from knowing.

Its unclear how fast this is going to ramp up...  so it’s unclear when we will know for sure.

Perhaps long before then though the speculation aspect will have decided it’s going to be a good thing.

 

7 minutes ago, aye-epp said:

which I think is fair to assume the answer is no, regardless of the type of volume (likely because there's equal and opposite sell pressure within ODL).

That’s possibly true but not certainly.  It actually is NOT equal because the BUY happens first and it happens in a different country than the later SELL.  How efficient arbitrage is in the complexity that could evolve across multiply connected corridors is very unclear.  
 

In fact...     if information and arbitrage were perfect and instant, (and in this modern world that is what they are evolving towards,) then in fact ODL would trend price upwards.


That’s because the market buy happens first.  I don’t think it’s likely that we would reach that perfection of trading in any near future but almost no one else talks about this so I wonder if it’s me being idiotic, or that the perfection (or near perfection) of arbitrage won’t ever happen to a sufficient degree, or if people just don’t see the ramifications.  Dunno,  and it’s not what I hang my hopes on.

The first thing I hang my hat on is that large volumes will remove the whales capacity to manipulate the market to a large extent.  The second thing that gives me hope is that volume begets volume,  and consistent volume trading tends to support a price.  Not targeted bursts of sells,  which crashes price,  but consistent 24 hour worldwide volume...  if that doesn’t tend to support price and gradually trend it upwards then I will be very surprised.

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1 minute ago, Tinyaccount said:

Yeah that’s a good question...   and you seem to think the answer is in but I think we are far from knowing.

Its unclear how fast this is going to ramp up...  so it’s unclear when we will know for sure.

Perhaps long before then though the speculation aspect will have decided it’s going to be a good thing.

 

Let me phrase it differently. Do you expect ODL to directly and immediately impact price with 10M per day ODL volume? how about 100M? how about 10B?

I realize they are related to each other but I think you may be mixing apples and oranges - meaning, I stand by my opinion that ODL doesn't directly and immediately impact price based on the buying pressure. The actual process of buying and selling over ~3-4min with ODL appears to not impact price. However, as ODL reaches a certain volume threshold then it will create a supply/demand issue, which hopefully (should?) increases price.

These are two different trains of thought.

6 minutes ago, Tinyaccount said:

It actually is NOT equal because the BUY happens first and it happens in a different country than the later SELL.

The timing isn't so important here - we're evaluating the entire ecosystem not a vacuum of one xrp ;) There will always be equal amounts of sell pressure and buy pressure, albeit ~4min later. 

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35 minutes ago, Tinyaccount said:

In fact...     if information and arbitrage were perfect and instant, (and in this modern world that is what they are evolving towards,) then in fact ODL would trend price upwards.

I caught this late but showcases my point - at what volume is this expected to occur at?

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2 hours ago, aye-epp said:

The timing isn't so important here - we're evaluating the entire ecosystem not a vacuum of one xrp.   There will always be equal amounts of sell pressure and buy pressure, albeit ~4min later. 

I think you missed the point (the mechanism).  Also,  after I showed you that the daily ODL is less than 20 million against a volume of say 2000 million (or much more, ) you still say the verdict is in?  It really is not.

 

But to explain why the timing COULD be important:

As I said before...  the buy happens first.  That MAY be critical.  (I’m not saying it is...  only that it’s technically possible that it could be.)

Think about it.  The price is X.  That was because someone just paid that amount.  The sellers are priced a small amount higher. The next sale will either be because the sellers dropped down to that price (or the even lower bids) or because a buyer stepped up to the sellers offers.  If that happens the price just rose.   So in the case of ODL it’s always ‘at market’ meaning each ODL transaction starts by raising the price.

Now if arbitrage is effective and information is perfectly transmitted in real time (what I mentioned earlier as ideal arbitrage) then over in the other country where the ODL sale is going to take place the market could have already responded and raised the price.  I don’t believe that happens now...  and I’m not certain it ever will...  but it certainly is possible and conclusively proves that:   no...   the ODL transaction is not symmetrical...  it’s asymmetric because of the arrow of time.

Whether that effect ever happens is not something I care about at the moment.  But certainly...  the verdict is NOT yet in.

 

 

Edited by Guest
Punctuation

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Not sure if this fine debate between Tiny and aye-epp is finished but just to change tack a bit, the fantastic essay from @galgitron touches on (among other things) where utility through ODL is going to have the biggest immediate and long term impact.
 

Most here have probably picked the essay up already. But one thing of interest from it that Galgitron notes is that the world’s heavily used corridors are not the main use case or target market for ODL because those corridors are already fast and liquid (e.g. USD-EUR). But from the charts posted above in this thread I see the USD-AUD corridor is increasing at a handy sort of clip for ODL.  I would have thought that would be one of those corridors already fast and liquid.  So perhaps Galgitron underestimates even that possibility for ODL. Other’s thoughts appreciated  

http://galgitron.net/Post/Ripple-versus-Stablecoinsor-is-it

 

Edited by Johno

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4 hours ago, Johno said:

Not sure if this fine debate between Tiny and aye-epp is finished

Can I just say btw that I really appreciate that there are some people...  aye-epp is clearly one,  that can disagree and debate without getting petty and personal.  It’s a real pleasure for me to find people like that.  It makes up for those others...   :) 

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On 2/22/2020 at 3:56 AM, Tinyaccount said:

Think about it.  The price is X.  That was because someone just paid that amount.  The sellers are priced a small amount higher. The next sale will either be because the sellers dropped down to that price (or the even lower bids) or because a buyer stepped up to the sellers offers.  If that happens the price just rose.   So in the case of ODL it’s always ‘at market’ meaning each ODL transaction starts by raising the price.

I am far from being expert @Tinyaccount, but this reminds me that that you can send a quantum of momenta in a certain channel by emitting an excitation in one direction or by emitting anti-excitation in opposite direction. Let me give you an example:

You have some large enough supply (vacuum) of XRP from previous days when nobody cared about it. (Funny assumption, right?) You can transfer AUD to USD by 1) first buying XRP for AUD, transferring XRP, selling XRP for USD or 2) first selling XRP for USD, transferring XRP to fill the hole and buying XRP for AUD.

Just saying that buy doesn't have to be always the first, if you consider only these small isolated situations. But this is more a smartass comment that anything wise.

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On 2/22/2020 at 1:30 AM, aye-epp said:

I caught this late but showcases my point - at what volume is this expected to occur at?

I think thats the 1mln dollar question.

Imo just buying XRP with dollars, send those XRP to Mexico and sell them does not do much for price. No matter how high the volume. But the bigger ODL corridors become, the more players it attracts. Players being both speculative traders but mostly Market Makers (big entities) willing to short term hold and trade/arbitrage XRP to make money in slippages. The more players, the more XRP is needed in the markets and the higher prices go.

But at what volumes it will outweigh speculative volume as of now? I think we are years away from that, even with the parabolic rise of ODL volume. I do however hope XRP (and the entire market probably) will experience one or two 'regular parabolic/manipulated' bull markets just out of speculation.

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