In a recent statement, Wells Fargo Treasury Management Officer Shannon Thorp gave a striking price prediction for XRP. The forward thinking executive expects a potential near-term rise in the value of XRP to somewhere between $100 and $500, specifically within the next 4 to 7 months. This price increase forecast represents an astonishing 14,200% to 71,400% increase from the current trade value.
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Thorp acknowledges the longstanding debate within the XRP community, with one faction relying solely on chart patterns and trends shown by Bitcoin to make short-term price predictions. On the other hand, another group emphasizes the importance of XRP’s utility, believing that the partnerships and the replacement of outdated systems are the main drivers of the price. However, Thorp presents a new perspective, emphasizing that XRP is NOT a security and that basing price forecasts on traditional securities logic is counterintuitive to the Ripple team’s original view.
Continuing with her rationale, Thorp introduces the concept of Liquidity Strength (LS) as a crucial metric to consider when predicting the future value of XRP. To establish a price range for the token, she considers the total supply, including circulating tokens, burnt tokens, owned by banks, governments and individuals, and assumes that Ripple has all their XRP out of escrow released.
According to Thorp, if one company owned all 100 billion tokens, their Liquidity Strength (LS) in a $1.00 to $5.00 price range would be $100 billion to $500 billion. However, she argues that such a calculation does not take into account the potential growth in the economy, messaging and settlement activities, and the continued benefits of using XRP.
Based on real-world examples, Thorp compares the token’s potential to that of SWIFT, which processes about 44.8 million messages per day. Even if Ripple could capture just 30% of SWIFT’s daily value, which it estimates at $7 trillion, it would result in a whopping $2.1 trillion in daily value (about 13.2 million messages) for XRP. Given XRP’s fast settlement time of 1 to 5 seconds, the liquidity would indeed be there. However, Thorp highlights the challenge of executing large transactions with limited liquidity power, as it can require a significant portion of a bank’s XRP holdings.
XRP price prediction
To arrive at its price prediction, Thorp considers several elements such as all global banks, burned XRP, individual holdings, XRP distributed to major banks and makers, and tokens available on liquidity hubs and exchanges. She estimates there could be 50 to 75 billion XRP supporting Liquidity Strength (LS) at any given time. Divided among approximately 300 to 1000 different banks, liquidity providers and governments, this would generate approximately $75 million XRP/dollar for each institution.
Considering JP Morgan as a top-notch bank with a daily transaction volume of more than $8 trillion, Thorp argues that even if Ripple were to capture only 10% of this market, amounting to $800 billion, the existing 75 billion XRP in circulation would not would suffice. to move such huge sums efficiently. Thorp acknowledges that this estimate only relates to cross-border transactions and does not include derivatives, real estate, CBDCs, technical parallels and NFTs.
Now that the groundwork has been laid, Thorp makes her price prediction, predicting that the price range of XRP will be somewhere between $100 and $500 in the near term (4 – 7 months). Her calculation is based on the Liquidity Strength (LS) scenario, where a $100 XRP price with a supply of 50 billion XRP would yield a $5 trillion LS, while $500 would result in a $25 trillion LS.
According to Thorp, this valuation gives the market breathing space, enables growth and ensures that no entity needs billions of XRP to operate on a daily basis. In addition, Thorp believes that a potential “flip of the switch” moment could trigger this price surge – an event that resembles a re-evaluation for XRP, similar to how gold is rated.
Notably, Thorp’s speculation represents an exciting phase for XRP’s future, although it’s important to remember that her prediction is based on several assumptions that may or may not be realized. As always, those interested in investing should conduct their due diligence, consider multiple perspectives, and make informed decisions.
At the time of writing, the XRP price was $0.7074.
Featured image from iStock, chart from TradingView.com