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Bitcoin dominance declines as Ripple makes incredible rally

Summary:

  • A rally on Ripple was caused by comments from the company’s CEO and broadening usage of the technology
  • Bitcoin dominance falls severely on the back of a stunning pick-up registered in Ripple (XRPUSD on xStation5)
  • Japanese GDP boosted thanks to Bitcoin according to Nomura estimations

Taking a closer look at the cryptocurrency block one may notice that moves have been quite contained of late except Ripple which had an astounding end of the past year. The digital currency rose on the back of remarks delivered by the company’s CEO who said "people are increasingly realising that Bitcoin is not going to be a panacea for all these payments problems that people imagined it would solve". He also referred to time needed to settle a payment saying "payments with XRP settle in a few seconds, but if you buy a cup of coffee with Bitcoin it will be cold by the time the payment has been settled". His comments clearly suggest that the technology based on Ripple needs much less time compared to that based on Bitcoin and therefore the former could be much more useful in the real economy.

Apart from the CEO’s remarks which were definitely in favour of the virtual currency we got also revelations that several major banks in the South Korea and Japan had decided to adopt the technology in their financial services in order to test it in a credit payments system. All of that taken together pushed Ripple to its fresh all-time record well above $2.4 making the digital currency the best performer in the past year. As you can see below Bitcoin’s dominance fell quite substantially over the past few weeks to the lowest level ever (close to 36% from around 85% seen in late February 2017).

link do file download linkBitcoin’s dominance shrank significantly over the past weeks which coincided with an increase seen in Ripple. Source: coinmarketcap.com

link do file download linkRipple (XRPUSD) surged as high as $2.45 in the end of 2017 but it failed to maintain those gains. The virtual currency is hovering around a 23.6% retracement of the latest leg higher and once this level is broken it could lead to a deeper decline toward another retracement placed at 38.2%. Source: xStation5

While cryptocurrencies are highly speculative financial instruments they could have contributed to Japanese economic growth in the past quarter and the whole year as well. According to calculations carried out by Nomura analysts a so-called Bitcoin wealth effect could amount to 96 billion JPY adding 0.3pp to GDP in a quarterly basis and 0.07pp in terms of a year-over-year basis. The bank’s calculations assume that every jump in asset value wealth of 10 billion JPY yields consumption to rise in proportion by 0.2 to 0.4 billion JPY. Finally it needs to highlight that Bitcoin trading volume in JPY is the highest in comparison to other currencies, hence an effect on GDP growth may be the most meaningful.

link do file download linkLitecoin (LTCUSD) could be also ready to resume its rally as the virtual currency was able to stay above a support area located nearby a 50% retracement. Once bulls are determined enough it could translate into a more long-standing trend which might see the price rising toward the highs at $370. Source: xStation5

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