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▲ XRP/AI Generated Image
The scenario that XRP could reach $589 is not merely based on bullish market expectations but stems from a price model that presupposes integration into global institutional payment networks and massive liquidity demand.
According to crypto media outlet NewsBTC on May 20 (local time), a scenario was presented where the XRP Ledger is adopted as part of a high-value payment simultaneous settlement system at the DTCC (Depository Trust & Clearing Corporation) and CLS (Continuous Linked Settlement) layers. In this model, XRP acts as a liquidity asset behind large institutional transactions. In this case, analysis suggests that a price level of $589 for XRP would be necessary to handle annual payment flows of approximately $73 trillion without significant price shock.
This model is designed for large obligatory transactions that are difficult to offset or split and hard to pass through multiple settlement layers. The transaction size per ticket is set at approximately $500 million to $10 billion. The annual $73 trillion payment flow includes approximately $15 trillion, which is 20% of the DTCC net settlement market; approximately $21 trillion, which is 14% of SWIFT cross-border payments; and approximately $12 trillion, which is 12% of the FX derivatives net settlement market. To this, approximately $5 trillion, which is 10% of repurchase agreements and FINRA atomic settlements, approximately $9 trillion, which is 33% of nostro account replacements, and approximately $11 trillion, which is 33% of stablecoin settlements, are added.
The key is that when XRP functions as a bridge asset absorbing massive capital flows, price fluctuations must be extremely low even in a single large payment. The model assumes a condition where, in a single ticket settlement of approximately $2 billion, the price fluctuation does not exceed the allowed slippage limit of 5 basis points (bp), which is the standard error for institutional foreign exchange trading desks. The figure of $589 was derived by inversely calculating the square root market impact law. Key variables applied include a ticket size of $2 billion, annual transaction volume of $73 trillion, volatility of 0.5%, allowed slippage of 5bp, turnover rate of 1.36%, and liquid circulating supply of 25 billion XRP.
The liquid circulating supply of 25 billion XRP excludes escrowed amounts, ETF holdings, foundation holdings, and inactive wallet amounts. Under these conditions, the total market capitalization required for XRP is calculated to be approximately $14.7 trillion. Dividing this required market capitalization by the actual active liquid supply of 25 billion XRP yields a price of $589. This approach differs from the common market capitalization comparison method that simply calculates based on the total circulating supply.
Currently, XRP's circulating supply is approximately 61.82 billion XRP, which is much higher than the liquid circulating supply assumed by the model. Ultimately, the $589 scenario is based on the structural condition that not the entire XRP supply, but only a limited amount, is injected as actual settlement liquidity. Whether XRP establishes itself as an institutional bridge asset connecting DTCC, CLS, SWIFT, FX derivatives, nostro account replacement, and stablecoin payment flows is the core premise of this price model.
*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
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