Ripple (XRP) Market Reaction Subdued Despite Unveiling Further Stablecoin Developments

Ripple has made progress in its stablecoin, Ripple USD (RLUSD), as detailed in a blog post dated 9 August. The company initiated beta testing of RLUSD on two major blockchain networks – The XRP Ledger (XRPL) and the Ethereum mainnet.

Despite the recent announcement of beta testing for Ripple USD (RLUSD) on the XRP Ledger (XRPL) and Ethereum mainnet, the XRP market has shown a surprising lack of enthusiasm.

While the introduction of a stablecoin is generally viewed as a positive development for an ecosystem, the response to RLUSD has been notably tepid so far.

The latest update from Ripple, published in a blog post on 9 August, revealed the company’s progress in developing a stablecoin, pegged on a 1:1 ratio to the U.S dollar. Fully backed by a combination of U.S dollar deposits, short-term U.S government treasties, and other cash equivalents, RLUSD is designed to maintain its value and stability in the market.

However, it is important to note that RLUSD is not yet available for public purchase or trading. The stablecoin will only become available once the beta testing phase is completed and all necessary regulatory approvals have been obtained.

The stablecoin market, representing a multi-billion dollar sector within the cryptocurrency landscape, is highly competitive and dominated by a few major players. As Ripple prepares to launch its stablecoin, it faces the challenge of competing against well-established stablecoins like Tether (USDT) and USD Coin (USDC).

According to press time data from CoinMarketCap, the total market capitalization of stablecoins had surpassed $170 billion. Of this, Tether (USDT) commanded a majority of the market with a staggering market cap of over $115 billion, making it the most dominant stablecoin.

Meanwhile, USD Coin (USDC) held the second position, with a market capitalization of more than $34 billion. Other stablecoins like DAI and First Digital USD (FDUSD) also held considerable shares, with market caps of over $5 billion and $1.9 billion, respectively.

An analysis of the daily chart by AMBCrypto revealed that the price of XRP had indeed fallen by a significant margin.

By the close of trading on 9 August, XRP saw a drop of 5.81%, with the price falling from approximately $0.61 to about $0.58.

At the time of writing, XRP was trading with a marginal hike of less than 1%, displaying a lack of positive price movement. The price hovered around the $0.58 level.

This lack of positive price movement could suggest that the market is yet to fully absorb the potential implications of the new stablecoin, or that other market factors are overshadowing this development.

The lack of enthusiasm among traders for XRP was further reflected in the funding rate data from Coinglass. At press time, XRP’s funding rate stood at -0.0030%, indicating bearish sentiment among market participants.

A negative funding rate typically means that shorts are paying longs to keep their positions open. This can also be interpreted as a sign that more traders are betting against the price of XRP, than are betting for it.

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