Ripple CTO Analyzes Similar Price Movements of XRP and XLM

A recent community discussion highlighted the strikingly similar price movements of XRP and Stellar (XLM). Ripple CTO David Schwartz provided his perspective on this intriguing phenomenon. Schwartz, who played a pivotal role in developing the XRP Ledger, suggested that the parallel price behavior of XRP and XLM might be influenced by external factors beyond their respective ecosystems. He acknowledged the presence of evidence supporting both sides of this theory, emphasizing the issue’s complexity.

Impact Of Stellar’s Token Burn

Schwartz pointed to Stellar’s significant token burn last year as a key example. Despite reducing half of Stellar’s entire supply, this event did not cause a noticeable deviation in Stellar’s price or its correlation to XRP.

The one bit that's the most convincing to me is that Stellar burned half their supply and there wasn't so much as a blip on their price chart or any real deviation from XRP's price correlation.https://t.co/x4qF9UuJvF
— David "JoelKatz" Schwartz (@JoelKatz) May 26, 2024

This observation led Schwartz to believe that a similar burn of Ripple-owned XRP would likely not positively impact XRP’s price. He referenced charts comparing XRP and XLM’s price behavior before and after the burn, which showed no significant change. Moreover, the anomaly persists despite the different tokenomics of XRP and XLM.

XRP has a total supply of 99.98 billion tokens, with 55.43 billion tokens in circulation, a price of $0.525, and a market capitalization of $29.1 billion. On the other hand, XLM has a total supply of 50.001 billion tokens, with 28.976 billion in circulation, a price of $0.1083, and a market capitalization of $3.14 billion.

Historical And Market Dynamics

The price correlation between XRP and XLM can be attributed to their intertwined history and market dynamics. Created by Ripple co-founder Jed McCaleb as a decentralized alternative, the Stellar ecosystem often mirrors XRP’s movements.

Investors tend to seek opportunities in similar assets, leading to capital flow into the market, thereby equalizing the price dynamics of these two cryptocurrencies. Schwartz’s analysis underscores the intricate relationship between XRP and XLM. Despite their different tokenomics and significant events like Stellar’s token burn, their price behaviors remain closely aligned.

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This phenomenon highlights the influence of external factors and investor behavior on cryptocurrency prices, suggesting that broader market dynamics play a crucial role in shaping the fortunes of these two assets.

Disclaimer: The information in this article should not be considered financial advice, and FXCryptoNews articles are intended only to provide educational and general information. Please consult with a financial advisor before making any investment decisions.