XRP’s current market capitalization according to data from CoinMarketCap is $13.1 billion, with its circulating supply at 41.1 billion tokens.
A new report, however, claims that the market cap figures are probably overstated.
The analytic firm Messari has questioned XRP’s circulating supply and has estimated that the crypto’s true market capitalization could be inflated by as much as half of what market aggregators and exchanges are currently displaying.
Messari’s report alleges that of the 41.1 billion XRP tokens in circulation, 19.2 billion of them are either “illiquid or subject to significant selling restrictions” connected to the token’s daily trading volume.
The illiquid or restricted tokens include “at least 6.7 billion XRP” that are held by Jed McCaleb, ostensibly following an agreement between Ripple and its co-founder who left to create Stellar (XLM).
There is also a further 5.9 billion XRP that Messari contends is a yet-to-be-delivered pledge to nonprofit RippleWorks. The entity also holds about 2.5 billion XRP tokens that are subject to the said daily selling restrictions.
Besides, Messari estimates that Ripple’s XRP II- which also sells the company’s tokens- holds up to 4.1 billion XRP that are also restricted.
Well, that comes to the 19.2 billion tokens the startup claims are subject to daily restrictions, and from which it states that XRP’s market cap is “likely” inflated by a massive $6 billion.
However, the firm’s report does note that “it is impossible to track the magnitude of this illiquidity without direct disclosures from Ripple.” As such, its figures have used what it calls “a reasonable estimate.”
A ripple spokesperson has reportedly disputed the findings, maintaining that the report is based on “inaccurate assumptions around lockups and selling restrictions.”
The spokesperson also noted that the “entire report is based on an incorrect calculation of market cap,” which should be simply taken as a multiple of the token’s current price and its total supply.
Accordingly, XRP contends that the digital asset’s current market capitalization is $31 billion as shown on the company’s website. Any other calculation, the person reportedly told Coindesk, does not represent the truth.
XRP currently trades at $0.318 and the total supply is 100 billion XRP.
Yet the Messari team notes that figures on “restricted” selling and lockups could be even higher than they estimate.
“[…] we believe the actual amount of ‘restricted’ XRP in distributions to investors, banking partners, and team members may be significantly higher than our initial estimates reflect.”
In the report, the startup points out that it approached both Ripple and RippleWorks for comment before going public with the report.
Noting that this leads to question marks about the restrictions and how they work in practice, the report states that over 99 percent of XRP trading volume originates from platforms suspected to engage in massive wash trading.
Messari adds that Ripple has so far not disclosed its methodology or the reference data from exchanges that it uses to calculate the trading volume for XRP, which is critical to selling restrictions.
Meanwhile, Ripple released a report detailing its Q4 2018 market for XRP in which it noted that the token’s average daily volume stood at $585.7 million.
The firm’s sales of XRP to institutions dropped from $98.06 million in Q3 to $40.15 million in Q4. Likewise, total sales shrank from $163.33 million in Q3 to $129.03 million in Q4.
Ripple also says that XRP now trades on more than 100 exchanges across the world.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.