In a recent tweet, crypto influencer Amelie highlighted a study on the fair market valuation of XRP, Rippleโs native cryptocurrency, noting the impressive range of valuations determined by different quantitative models.
The study conducted by Jimmy Vallee, MD at Valhil Capital, and Molly Elmore, Valhil Capitalโs Blockchain Businesses CMO, presented six unique valuation models, each providing insights into XRPโs potential value as a widely adopted layer-1 asset for global value transfer.
This report, which details XRPโs estimated value across scenarios, presents valuations ranging from a conservative $3.5K to a more optimistic $22K, with some models projecting values as high as $122K and even $513K.
WOW!
A RECENTLY PUBLISHED STUDY AIMED TO DETERMINE THE FAIR MARKET VALUATION OF #XRP AND FOUND ITS FAIR VALUE BETWEEN $3,5k AND $22k! https://t.co/uL9P0EvWq2 pic.twitter.com/3lZppM2jzW
โ ๐๐ถ๐ฎ๐ต๐ฒ๐ฎ (@_Crypto_Barbie) November 8, 2024
Overview of the Valuation Models
The study makes multiple assessments to estimate XRPโs fair market value. For instance, if the XRP Ledger is broadly utilized as a layer-1 protocol for global transactions.
Each model used industry-accepted methodologies to explore different aspects of XRPโs utility, ranging from transactional utility to store of value potential. Hereโs a breakdown of the key models and their implications:
Athey & Mitchnick Models: This set of models provides valuations based on different global liquidity scenarios, estimating XRPโs value if it were to support different tiers of worldwide asset transfer. The scenarios are set at $1 Quadrillion (Q), $100 Trillion (T), and $530 Trillion, corresponding to XRP prices of $9K, $908, and $4.8K respectively.
Bakkes Pipeline Flow: This model, based on transactional flow, places XRP value at $3.5K. This calculation focuses on XRPโs function in facilitating global transactions and cash flow.
Collateralization Models: The study also evaluated XRPโs potential as collateral with 100% and 10% collateralization scenarios. With 100% collateralization, XRPโs value reaches $12.2K, while 10% collateralization estimates it at $1.22K, reflecting XRPโs role in securing value across various financial networks.
Discounted Cash Flow Models: Several models based on discounted cash flow (DCF) analysis, which values assets based on projected cash flows and utility over time, were included. The DCF models at 1%, 2%, and 3% discount rates provided XRP valuations of $15K, $18K, and $21.9K, respectively, indicating a progressive increase in XRPโs value as the discount rate decreases.
Golden Eagle Models: These models assessed XRP over extended time frames, focusing on store-of-value potential. In the 99-year scenario, XRPโs estimated value is $13.3K, while the 2030 projection places XRP at a more modest $9.81.
Quantum Liquidity Model: The Quantum Liquidity model, exploring XRPโs potential in high-value liquidity applications, gave a valuation of $513K, the highest in the study. This model considers an extreme case where XRPโs store-of-value utility is maximized, creating a theoretically high valuation.
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Summary of Findings and Key Takeaways
The valuations vary significantly depending on the assumptions and focus of each model, with most results clustering between $3.5K and $22K per XRP when excluding extreme outliers. The median value across all models is approximately $12,822, while the mean value reaches $61,231.
The study emphasizes the importance of the โratio between utility for transactions versus store of value,โ which significantly influences XRPโs market valuation. Models like the Bakkes Pipeline Flow and Discounted Cash Flow approaches primarily focus on XRPโs utility as a transaction facilitator, while others, such as the Golden Eagle and Quantum Liquidity models, lean more toward a store-of-value perspective, highlighting XRPโs potential to secure long-term value.
Implications for XRP Investors and the Broader Market
These valuations provide insights into how XRP could perform under different market conditions, especially if it achieves mainstream adoption as a backbone for global financial transactions.
The high valuations suggest that XRPโs value could soar if it becomes a widely accepted medium for global liquidity. This is when the tokenโs utility goes beyond simple remittances to vast international financial flows.
For investors and stakeholders, these valuations underscore the tokenโs potential as a key player in the global financial system. However, itโs crucial to note that these are theoretical valuations based on specific scenarios, which may or may not materialize.
The actual market price of XRP will depend on numerous factors, including regulatory acceptance, technological adoption, and competition from other digital assets.
Disclaimer: This content is meant to inform and should not be considered financial advice. The views expressed in this article may include the authorโs personal opinions and do not represent Times Tabloidโs opinion. Readers are urged to do in-depth research before making any investment decisions. Any action taken by the reader is strictly at their own risk. Times Tabloid is not responsible for any financial losses.
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