The long-running XRP market debate misses the real question, according to Digital Ascension Group CEO Jake Claver: can the network receive the flow of institutional payments without incurring withdrawal costs? In a March 26 video, Claver argued that the market capitalization is a poor measure of the digital asset’s performance and said that the price of XRP will need to rise materially if it is to support the payment of the bank rate.
Claver laid the blame on what he calls a “liquidity index,” a model he says is designed to measure “the true use and stability of digital assets” rather than just the valuation of its subject. His framework includes six variables: market depth, liquidity continuity, liquidity, available liquidity, payment speed, and access. When those factors are evaluated together, he said, the main requirement for a payment instrument is not speculation but a price high enough to make large transactions work.
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“The assets that will make up the future financial system can’t just be speculative,” Claver said. “They really need a high stable rate to operate globally.”
Why XRP May Need a Very High Price
His argument begins with an offer. Claver compared XRP to a rarefied hoard, saying that the right figure is not just the total issuance but how many tokens are actually available for trading. If demand increases while most of the supply is locked out, the rest becomes more important. He tied that directly to XRP’s payments thesis, describing it as “fixed supply, increasing demand,” with the reduced amount remaining in the market doing most of the pricing work.
From there, Claver turned to the depth of the market, which he characterized as the main obstacle to institutional use. He compared XRP liquidity to a pool of water that must be deep enough to absorb a large person without chaos. If a bank wanted to move $100 million cross-border using XRP, he said, the shallow market would not be able to absorb the flow cleanly and price volatility would follow.
“The lever for that has to be value,” he said. “If XRP costs $1 each and you need to move $100 million to the network, you need a hundred million tokens sitting in a pool ready to absorb that trade. But as the pool gets bigger and let’s say XRP costs $100 each, you only need one million tokens to hold the same 100 million trade.”
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That mentality extends to liquidity, which Claver described as one of the most obvious reasons banks don’t use crypto rails for transferring large amounts. He said a $100 million XRP transaction today could lose “somewhere around 10% just because of slippage,” or about $10 million, while traditional equity markets could process the same size in less than half a percent. To reduce that gap, he said, the amount sitting on the order books will need to grow about 20 to 100 times. With a planned supply of tokens, he said, the price would have to do “all that work.”
Claver also pointed out that the available supply of XRP could tighten over time. He cited ETF products, corporate and banking listings, and DeFi pools as sources of locked-in tokens that cannot be found on exchanges. In that setup, he said, the rise in demand would offset the decline in the float and the price would not “slow down” but the gap is high when sellers are scarce.
Speed is another pillar of the thesis. Claver said XRP’s 3 to 5 second settlement time gives the same amount of revenue much more leverage than slower networks, allowing market makers to recycle money more efficiently. But he emphasized that speed alone is not enough. “If each trade costs 1 to 2% smoothly,” he said, “the speed advantage turns into a quick way to lose money.”
He closed by arguing that market cap only provides an oversimplification because it assumes that every token can be valued at the last price it was traded for. For a network that aims to process cross-border value at scale, he said, the real test is whether its order books can absorb the facility’s capacity without breaking the bank. According to Claver, that makes XRP’s high prices less a matter of hype than a structural condition for the network to do the job its advocates envision.
At press time, XRP traded at $1.3337.
The featured image was created with DALL.E, a chart from TradingView.com
