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Ripple warns of RLUSD shortage and volatility at launch

Ripple warns of RLUSD shortage and volatility at launch

GrafaGrafa2024/12/16 09:10
By:Isaac Francis

Ripple (CRYPTO:XRP) CTO David Schwartz has cautioned investors about potential supply shortages and volatility when Ripple’s stablecoin, RLUSD (CRYPTO:RLUSD), launches.

The US dollar-pegged stablecoin is expected to experience outsized price swings initially despite its design to maintain a 1:1 parity with the dollar.

Schwartz addressed these concerns in a post on Dec. 15, emphasizing that investors should avoid "FOMO" (fear of missing out) during this period.

“There actually is someone willing to pay $1,200/RLUSD for a tiny fraction of one RLUSD,” Schwartz revealed, referring to a pre-launch bid on a Ripple wallet.

“The price will come back to very close to $1 as soon as supply stabilizes. If it doesn’t, something is very seriously wrong,” he stated, attributing such bids to speculative interest and the symbolic appeal of owning the first RLUSD tokens.

Ripple’s RLUSD received final approval from the New York Department of Financial Services on Dec. 11, with the company confirming the stablecoin’s launch is imminent.

Once released, RLUSD will play a critical role in Ripple’s cross-border payment solutions, operating alongside its native cryptocurrency, XRP (CRYPTO:XRP).

Ripple CEO Brad Garlinghouse has highlighted RLUSD’s focus on large institutional players, positioning the stablecoin as complementary to XRP.

Ripple aims to use XRP’s significant liquidity to stabilize RLUSD, ensuring the stablecoin remains pegged to the dollar while supporting its broader adoption.

Investors are urged to be cautious as pre-market bids suggest speculative activity that could lead to price inflation at launch.

“Please don’t FOMO into a stablecoin! This is not an opportunity to get rich,” noted Schwartz.

Ripple plans to use the pairing of RLUSD and XRP to enhance its payment network, appealing to global institutions and bolstering liquidity for cross-border transactions.

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