- Ripple‘s CTO warns against speculative trading of upcoming RLUSD stablecoin despite pre-market bids reaching $1,244.
- RLUSD received New York Department of Financial Services approval on December 11, 2023.
- The stablecoin will operate on both XRP Ledger and Ethereum mainnet for cross-border payments.
- Market arbitrage expected to maintain RLUSD’s $1 peg once supply stabilizes.
- XRP token reached $2.74 in December, marking its highest value since January 2018.
Ripple’s CTO David Schwartz issued a stark warning about potential price volatility for the company’s upcoming U.S. dollar-pegged stablecoin RLUSD, as pre-market bids reached $1,244 per token. The unusual pricing activity comes as Ripple prepares to launch its first stablecoin following regulatory approval.
Supply Constraints and Price Mechanics
In a December 15 statement on X, Schwartz addressed the inflated pre-market valuations, attributing them to limited initial supply and speculative behavior. "There actually is someone willing to pay $1,200/RLUSD for a tiny fraction of one RLUSD," he noted, while emphasizing that such prices would be temporary.
The stablecoin, which received approval from the New York Department of Financial Services on December 11, will operate on two blockchains:
- XRP Ledger (XRPL)
- Ethereum mainnet
Market Stabilization Mechanisms
According to Ripple’s official announcement, RLUSD aims to facilitate cross-border payments. Market arbitrageurs will play a critical role in maintaining the $1 peg by:
- Selling RLUSD when prices exceed $1
- Purchasing when prices fall below $1
"The price will come back to very close to $1 as soon as supply stabilizes. If it doesn’t, something is very seriously wrong," Schwartz stated.
The warning coincides with significant movement in Ripple’s native token. XRP surged to $2.74 in December, its highest level since January 2018, representing a 500% increase over 30 days. Current Coingecko data shows XRP trading at $2.41, down 1% in the past 24 hours.
Ripple has not announced an official launch date for RLUSD, and company representatives did not respond to requests for comment regarding the timeline.
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