Ripple Goes on a Rip… But Let us Not Forget the History of the Crypto Market and Ripple Itself
Ripple surpassed Ether to become the #2 cryptocurrency by market cap in the last week of December reaching a market cap of more than $90 billion.
Ripple’s price rose from .25 cents to $2.70 in just two weeks!
That high was not sustained, but it is none-the-less notable.
Back in October Bitcoin Cash had accomplished the same feat for a few brief moments. Doing this is uncommon in crypto and is an impressive milestone.
New announcements, some speculation, a quick and speedy coin, great tech, and a pro team have helped propel Ripple to new heights as it once again proves itself a top coin. Congratulations are in order, but so are some sober considerations of what this all means in context of the crypto market.
NOTE: The chart above (1 year historic chart of Ripple’s price in terms of USD and BTC) is meant to illustrate two things 1. That Ripple has made great gains over time, and 2. That even a great coin can enter a bear market after everyone is stoked about it and the price increases dramatically in a short time. With Ripple this is not the first time we have seen a week like the last two weeks. This shouldn’t make us panic, but this is the sort of information we should factor into our strategy for obtaining, trading, and holding our Ripple.
What Can We Learn From the Rise of Ripple?
This helps us understand that which coins are in the top 10 – 20 by market cap isn’t a static thing, it is something that can evolve over time as certain coins become favored and others fall out of favor (even if only in the short term).
This also helps us to understand some other important lessons:
Coins that go up quickly have a tendency to enter correction phases. Be we talking about Bitcoin going from $10k to $20k, Litecoin going from $100 to $400, Bitcoin Cash going from $300 to $4500, or Ethereum going from $300 to $850, the lesson is the same: growth tends to come fast, while corrections tend to come just as quickly and can be deep.
That is the nature of the cryptocurrency market.
Given the above, it can be dangerous to have a short term view in cryptocurrency.
If you try to crown a new King/Queen every time a given crypto has a price spike or a correction, then you’re very likely to be playing a game of thrones. Likewise, if you jump on every coin that is booming, you really risk jumping in at the high and “holding bags.”
I’m not saying that buying the hot coin of the moment is a bad move, in fact it is the best move by some measures while the coin is going up.
I am however saying that you should be careful not to dump your “losers” and jump on “winners” without careful thought.
For months Ripple was “a loser” in terms of making gains against USD or BTC. It maybe made sense to dump it for BTC in the summer, but if you waited too long, if you say waited until recently and dumped it for Litecoin when Litecoin was at $400 (or BCH at $4500, or BTC at $20k, etc) then you made a really unfortunate move.
If you can catch the start of a run, then shifting a coin not performing to one that is can be great. If however you wait until a coin goes 8x or 10x to trade into the coin, you risk “buying in at the top.” If you trade into a coin that is at an all-time-high from that you were waiting to pop (and it does pop shortly after), and then it does, you just created a double whammy! You missed the run of the coin you were waiting on, and you now have to ride through the correction of the coin you just bought into.
FOMO is not your friend, and it is very hard to see the future in the moment!
To avoid this sort of string of bad luck, a good strategy is to average into a spread of coins you like, then to wait until they see amazing growth like Ripple did, then to take incremental gains to other coins you like.
TIP: Be careful not to take gains too early. If you had bought $95 Litecoins in the summer it was tempting to sell $150 Litecoins in November (after-all you had waited months and finally you made your money back!) However, in retrospect, this would have seen you selling way too early. Thus, if you take gains incrementally (say once every 2 days after a run starts, you avoid selling your whole stack at once).
Should I Buy / Hold Ripple At This Point?
For a general answer:
There is nothing wrong with holding some of your Ripple long and staying stoked about the future. Likewise, there is nothing wrong with buying more at any given price point. However, if you look at the history of crypto, you can see clearly that today’s winner isn’t necessarily the all-time winner and that no run lasts forever without a correction.
The great BTC has seen its share of bear markets, so has Ether, so has Ripple, so has Litecoin, so has Bitcoin Cash, etc.
Without fail, every time we start hearing about a new King/Queen on social media, we end up seeing a new coin take its throne within a week or two.
Look at the chart at the top of the page, as you can see Ripple went up in USD over time, but went through a long bear market in 2017. Meanwhile, its value against BTC did not fair well through that bear market. What happened in the past two weeks, well it essentially happened a little over a half a year ago, and the correction in terms of BTC price was deep and quick.
The crypto market can be rabid, and even the coin most deserving of the crown tends to get overbought while everyone FOMOs.
The true winners aren’t the coins going up today, they are the ones that don’t go back to square one after their run, the ones that retain some value and volume, the ones that come back again again and again. They are the ones that have active teams working on them. They are the ones with great use values and tech behind them.
Ripple fits this bill, but so do many others that have been hotter or colder on a given day.
Should you be bullish on Ripple? That is your call, but there is wisdom in that at any price given its standing and history.
Should you dump everything for Ripple and decide that other coins are dead and Ripple is King/Queen based on the last two weeks? That is the move I would caution against.
I see people do this every time a coin goes on a rip, so far its worked out something like never in the short term.
I get it, you see other people get 10x, you want 10x. Thing is, if you want 10x, you probably need to go for the coin that hasn’t just gone 10x.
In the long term, all the solid top picks tend to get their time in the spotlight.
Thus, you either need to be ready to hold your Ripple long, seeing many better prices pass you buy, average into your position over time, or take advantage of this nice high to flip into some other coins you love that haven’t just gone up 10x in two weeks.
I’m not saying dump your Ripple, I’m saying that if you look at the top coins by market cap and look at the 1 year charts, you can get a sense of which coins might pull a Ripple in the next 6 months, and which coins are likely to do a BTC like pullback sooner rather than later.
Buy a spread, love the Ripple, but don’t go overreacting to the Ripple rip. 2018 will be a great year for Ripple, but it will also be a great year for other coins (including whatever coin is the rockstar of next week).
NOTE: ADA has also preformed very well recently. ADA shows us the other thing that can happen with Ripple. That is, what goes up, just sort of keeps going up. There is no magic number of days a coin can run for before correcting, and there is no rule that says a correction has to be that deep. Ripple could just keep going up forever and be worth infinity and never correct. It is just that, if it did that, it would literally be the first time a coin has ever done that in the crypto space. Ripple is great, but we have to prepare for rainy days in crypto. The market is too fickle not to.
UPDATE LATE FEB 2018: This article was written before the great alt correction of January 2018. It turned out that no alt was safe, XRP, ADA, and all others like them lost a good portion of their value. Crypto comes in cycles and waves, and given this it is almost always a mistake to assume that the new all time highs that were reached very quickly in one phase is an indication of how things will be from now on. Instead, those all time highs market targets to be beat for the next run after a healthy correction. XRP hardly gave everything back here in late February 2018, but the drop from a high of $3.50 down to $0.80 was noticeable. If at some future point, after XRP has gone to $5+ or something, you come back and read this, take a moment to open up the multi-year chart for XRP and take note of how it (like any other alt) grows in waves. In other words, you still had room for profits at the $2.70 price point noted in this article, but the clock was ticking… and the indication of that was the manic and rapid growth XRP was seeing in a very short time period. Almost every coin suffered this fate between December 2017 and January 2018, although few preformed as well as XRP.
"Ripple Becomes the #2 Crypto By Market Cap" contains information about the following Cryptocurrencies: