In a recent tweet, crypto influencer Amelie highlighted a study on the fair market valuation of XRP, Ripple’s 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 Capital’s Blockchain Businesses CMO, presented six unique valuation models, each providing insights into XRP’s potential value as a widely adopted layer-1 asset for global value transfer.
This report , which details XRP’s 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
— 𝓐𝓶𝓮𝓵𝓲𝓮 (@_Crypto_Barbie) November 8, 2024
Overview of the Valuation Models
The study makes multiple assessments to estimate XRP’s 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 XRP’s utility, ranging from transactional utility to store of value potential. Here’s 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 XRP’s 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 XRP’s function in facilitating global transactions and cash flow.
Collateralization Models: The study also evaluated XRP’s potential as collateral with 100% and 10% collateralization scenarios. With 100% collateralization, XRP’s value reaches $12.2K, while 10% collateralization estimates it at $1.22K, reflecting XRP’s 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 XRP’s 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, XRP’s 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 XRP’s potential in high-value liquidity applications, gave a valuation of $513K, the highest in the study. This model considers an extreme case where XRP’s 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 “ratio between utility for transactions versus store of value,” which significantly influences XRP’s market valuation. Models like the Bakkes Pipeline Flow and Discounted Cash Flow approaches primarily focus on XRP’s 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 XRP’s 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 XRP’s value could soar if it becomes a widely accepted medium for global liquidity. This is when the token’s utility goes beyond simple remittances to vast international financial flows.
For investors and stakeholders, these valuations underscore the token’s potential as a key player in the global financial system. However, it’s 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 author’s personal opinions and do not represent Times Tabloid’s 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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