XRP and BTC: Decoupling time is still a pipe dream

It is an objective fact that cryptocurrency prices follow the bitcoin behavior on the market like puppies follow their owners and even though many bigger crypto projects keep invoking the “decoupling” and announcing their independence, that hasn’t happened yet.

Decoupling in a nutshell is being free from Bitcoin’s influence: most of the altcoins and their prices are highly dependent on bitcoin price movements. Every time bitcoin hibernates and enters a slump, altcoins crash even harder.

Although the recent resilience XRP price showed amidst bitcoin decay, shows Ripple’s token is moving in the right direction as far as decoupling goes, but the real thing is still a far fetch as there are a lot of conditions that need to be met before this happens.

Obviously, adding more fiat/XRP pairs would help the decoupling with Coinbase as a key for this to happen – it could be a good boost in that respect although it appears there are some political games at stake there so even if Ripple are doing their best, they still can’t be added there.

Once XRP is listed on more exchanges as a base pair and people can buy directly with Fiat, then we will see less of this BTC influence. Rumors about Binance adding of XRP as base currency is another plus for the decoupling narrative.

Here is another interesting rationale with a link to a tool that tracks the BTC/XRP correlation:

“Trying to predict this, like trying to predict almost anything to do with cryptocurrencies, is a fools errand.

However it is easy to track how the decoupling is going, use this site: https://enroyd.com/xrp_correlations/

The graph shows the 30 day correlation between XRP and BTC price movements. Values above 0 shows the degree to which XRP is moving in the same direction as BTC prices (either up or down in tandem), and values below 0 shows the degree to which XRP moves in the opposite direction of BTC prices (so when BTC goes down, XRP goes up, or vice versa). Values around 0 shows that when BTC price moves, XRP stays steady, or alternatively that when XRP moves up or down that the BTC price is staying steady.

When we get a sustained period of the XRP correlation being in the range of -0.25 to +0.25, we can start to think that XRP has decoupled from BTC. The question is ‘how long’ should this period need to be – IMO I think on the order of 2-3 months would be a very strong signal that the XRP market is largely decoupled from the BTC one.

There is also one other very obvious signal that prices have decoupled, and that’s if the market cap of XRP overtakes the market cap of bitcoin. IMO that is probably still 12+ months away.”

Even though XRP did manage to outperform BTC in 3 separate periods, there is still a notable lack of sustained, independent price action that would indicate decoupling is happening. These 3 occasions when XRP managed to behave as a sovereign digital asset do show that it is building a separate sentiment around itself but it is not quite there, yet. If Ripple company keeps up their high bar effort to challenge SWIFT and new partners decide to use XRP token in their transfers, XRP will develop its own, autonomous value proposition and intrinsic value that will ultimately lead to the real decoupling from BTC.

The most recent XRP drop shows that, in spite of the fact it held its ground amidst the BTC demise for couple of days, it still cracked and descended after BTC.

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Felix Küster
Felix Küster

Felix Kuester works as an analyst and content manager for Captainaltcoin and specializes in chart analysis and blockchain technology. He is also actively involved in the crypto community - both online as a central contact in the Facebook and Telegram channel of Captainaltcoin and offline as an interviewer he always maintains an ongoing interaction with startups, developers and visionaries. The physicist has couple of years of professional experience as project manager and technological consultant. Felix has for many years been enthusiastic not only about the technological dimension of crypto currencies, but also about the socio-economic vision behind them.

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