XRP, the sixth-largest cryptocurrency by market capitalization, has demonstrated a surprising price connection with XLM, the Stellar blockchain’s native coin, confusing investors and analysts alike.
However, the particular basis for this association is unknown and has sparked much conjecture and controversy.
In recent tweets, Ripple CTO David Schwartz provides a fascinating and largely unknown take on the commonly questioned subject of why the two cryptocurrencies’ price movements correspond so strongly.
In recent days, there has been a heated debate on social media concerning the XRP pricing. During the conversation, an X user recommended that Ripple burn some of its supply to impact the XRP price.
https://x.com/JoelKatz/status/1759523883647148252?s=20
Ripple CTO David Schwartz dismissed this notion, saying he sees no reason to believe that burning will benefit the XRP price. He stated that Stellar’s burn had no substantial effect and was one of the sources of the price connection between XRP and XLM.
Schwartz said, “Stellar’s burn had no real effect, and XRP’s price tracked XLM’s through their burn.”
Other likely reasons
Schwartz answered to an X user’s query on why XRP and XLM mimic each other by saying he couldn’t confirm any specific explanation. He believes that the primary drivers of the XRP price are external to the XRP ecosystem and affect both XRP and XLM.
Schwartz offers two alternative hypotheses, which he feels may be incorrect. First, XRP is larger than XLM, and the market believes they are equivalent; hence, XRP “drags” XLM about. Second, someone or a group of persons is manipulating the price of XRP and/or XLM in order to force them to coordinate with one another.
However, the connection between XRP and XLM is a complicated and nuanced phenomena that is influenced by a variety of factors, including shared history, comparable market dynamics, and market players’ perceptions, and it remains unexplained to date.
