- Zach Rector identifies 2.5% spread issue with XRP trading at $2.83 currently.
- Analyst predicts chaotic conditions when XRP approaches $10 price level.
- Ripple partners with Securitize for tokenization of money market funds.
Analyst Zach Rector has highlighted liquidity challenges facing XRP as the token trades at $2.83 with a 2.5% spread between buy and sell prices. The spread indicates the gap between what sellers receive and buyers pay for the asset.
Current market conditions show sellers could receive approximately $2.74 for XRP while buyers may pay closer to $2.88. This differential reveals market imbalances that could intensify during periods of elevated volatility.
Rector projected that trading conditions will become extremely turbulent when XRP begins advancing toward $10. “When XRP is on the run up to $10, it’s going to be a damn riot,” the analyst stated.
Rapid price movements strain liquidity
During sharp price surges, liquidity typically decreases as trading volumes overwhelm exchanges. These conditions lead to wider spreads and increased slippage, creating execution difficulties for traders attempting to enter or exit positions.
Rector’s analysis suggests that price appreciation alone does not ensure easy profit realization. Euphoric rallies often bring trading friction, exchange delays, and liquidity gaps that prevent selling assets at anticipated prices.
Community member Josh D proposed that automated market makers could address liquidity challenges during volatile market conditions. AMMs offer an alternative to centralized exchanges where spreads widen during high-activity periods.
Ripple CTO David Schwartz previously explained how AMMs on the XRP Ledger can extract value from market volatility. The mechanism allows liquidity providers to benefit as prices fluctuate within the system.
Rector’s warning indicates the current environment may provide an opportune accumulation window while activity remains subdued. Traders waiting to enter during euphoric phases may encounter difficult conditions when attempting to execute orders.
Tokenization developments support holding case
Rector cautioned against selling XRP while highlighting Ripple’s recent partnership with Securitize. The collaboration aims to integrate cryptocurrency into mainstream financial infrastructure.
VanEck and BlackRock have announced intentions to tokenize money market funds through the partnership. Fund holders will be able to redeem assets directly on-chain using Ripple’s RLUSD stablecoin, powered by Securitize’s platform.
Securitize emphasized the transformative potential by stating “It’s time to tokenize the world.” Rector responded to the development by questioning the logic of exiting XRP positions at current levels.
“Imagine thinking now is the right time to sell XRP…” Rector commented, suggesting sellers may miss developments that could positively impact the token’s utility and future price trajectory.
Source: https://thenewscrypto.com/xrp-rally-to-10-could-create-chaotic-trading-conditions-heres-why/