XRP is significantly undervalued, according to a new report from the independent crypto research group Picolo.
The firm says Ripple’s recent Q3 XRP Markets Report points to “further upside” in the price of XRP, due to a surge in institutional investor volume. Ripple reported a 481% increase in quarter-over-quarter institutional direct sales of XRP, rising from $16.87 million to $98.06 million.
Picolo’s research also points to the commercial release of Ripple’s xRapid, which utilizes XRP for cross-border payments, as a potential catalyst for a rise in the price of XRP.
“It is important to note that XRP’s value is derived when clients use XRP as a bridge currency on Ripple’s xRapid platform, and not directly from its other products. We derive its fundamental value from two aspects:
1. Value of cost savings utilising XRP on xRapid, not including savings derived from xCurrent
2. Value of locked-up liquidity in NOSTRO accounts that could potentially flow into XRP (estimated 1% of total locked-up liquidity)
Our analysts derived an intrinsic valuation of $1.75 per XRP token. The estimates used are conservative as it does not include tokens burnt, the growth of Ripple’s market share, value attributed for error reduction and market share of other non-bank financial institutions.”
The firm also identifies several risk factors for XRP investors, including:
• Potential confusion about the difference between Ripple and XRP
• Concerns about whether XRP is centralized, due to the fact that Ripple owns 60% of the total supply
• Lack of clarity on whether XRP will be classified as a security, with several lawsuits pending on the matter