The debate over the impact of Ripple’s On-Demand Liquidity (ODL) product on the price of XRP has been a controversial topic.
Mickle, a well-known financial advisor and market commentator, recently took to social media to dispel what he said was “persistent misinformation.”
After For Mickle, the idea that Ripple’s ODL product has no influence on the price of XRP has flaws. His argument suggests that ODL plays a significant role in increasing the value of XRP, contrary to the claim that the buying and selling dynamics in ODL transactions cancel each other out.
The role of ODL in the XRP price
Mickle stressed that some critics argue that the buying and selling market Transactions in ODL are neutral on the XRP price, but overlook one crucial aspect. In his opinion, this is the need for market makers to hold XRP reserves.
Market makers who facilitate these transactions must hoard XRP to ensure they can meet demand. As ODL transactions increase globally, demand for XRP among market makers also increases, leading to higher accumulation of the token. Mickle argues that this creates a supply constraint, which naturally drives up the price of XRP.
He further claims that the global expansion of ODL will force even more market makers to hold XRP in their reserves. This increased demand, combined with the limited supply of XRP, should logically lead to a Upward pressure on the price.
Mickle’s view challenges the existing belief that ODL’s operating structure is inherently price neutral. However, Ripple and some of its executives have confirmed that ODL transactions are indeed demand neutral.
A common refutation
While Mickle is optimistic about the impact of ODL on the XRP price, not everyone in the XRP community agrees. Eri, a well-known figure in the XRP community, pointed out in a response that Ripple itself has stated in court documents that ODL transactions are largely demand-neutral.
Ripple’s response in SEC court document. ODL is price neutral. Bob Way left Ripple before ODL flow was changed to a Ripple-managed wallet. pic.twitter.com/8ho28qGDW5
– 🌸Crypto Eri 🪝Carpe Diem (@sentosumosaba) 24 August 2024
The Ripple disclosure cited by Eri shows that ODL transactions, which involve the simultaneous purchase and sale of XRP, do not significantly affect the price.
According to court documents, this is because each ODL transaction involves the purchase and sale of the same amount of XRP within a short period of time, effectively neutralizing any impact on the token’s market value.
Eri also highlighted that Bob Way, a former Ripple product manager whom Mickle referenced in his argument, left Ripple before any significant changes were made to ODL’s operations. According to Eri, Ripple’s current system for managing ODL transactions is different from the setup during Bob Way’s tenure.
Regulatory environment
Meanwhile, Mickle also highlighted how regulatory developments could impact XRP, noting that recent changes in global liquidity trends triggered by potential Federal Reserve rate cuts could lead to a more bullish environment for cryptocurrencies.
This expected inflow of liquidity, coupled with favorable regulatory developments, could lay the foundation for a significant bull market in the cryptocurrency market, from which XRP is likely to benefit.
Mickle also spoke about the legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC). He highlighted recent developments, including a court ruling in the Kraken case, that could impact the SEC’s future strategy.
According to Mickle, the SEC could be more cautious on the appeal in the Ripple case to avoid creating a precedent that could weaken its position in other ongoing proceedings.
Disclaimer: This content is for informational purposes only and should not be considered financial advice. The views expressed in this article may include the personal opinions of the author and do not reflect the opinion of The Crypto Basic. Readers are advised to conduct thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial loss.
