Analyst Declares XRP a “Zombie Asset” Amid Ripple’s Expansion

Crypto analyst Atlas has labeled XRP a “zombie asset,” suggesting that its survival relies more on belief than on tangible demand. This assertion comes despite ongoing growth for Ripple, the company that created XRP, which continues to expand its payment services. Notably, financial institutions can utilize Ripple’s technology without needing to hold or transact in XRP, raising questions about the token’s actual utility in the market.

In a recent analysis, Atlas examined Ripple’s business model alongside on-chain data, highlighting a disconnect between XRP’s market value and its real-world usage. While Ripple operates successfully, generating significant revenue, it appears that XRP’s relevance is diminishing. The market cap of XRP is nearing $100 billion, yet the activity on the XRP Ledger does not support such a valuation. The decentralized finance (DeFi) activity on the ledger remains modest, with total value locked reported in the tens of millions rather than billions.

Ripple’s Business Model vs. XRP’s Utility

Atlas emphasizes the distinction between Ripple, XRP, and the XRP Ledger. Ripple sells software and payment infrastructure to banks and financial institutions, which often do not require the use of XRP. This suggests that the company’s success does not necessarily translate into increased demand for its token. He further raises concerns about the decentralization of the XRP Ledger, which relies on a list of trusted validators closely associated with Ripple, potentially compromising its independence.

Recent spikes in XRP transaction activity have also drawn scrutiny from Atlas. He points out that Ripple has acknowledged that some of this activity resulted from micro-transaction spam, indicating that the increased transaction counts do not reflect genuine economic use. Additionally, he notes that past adoption was frequently incentivized through programs like XRP rebates. Partners such as MoneyGram reportedly disposed of these tokens quickly, suggesting that demand may have been artificially stimulated rather than organically cultivated.

XRP’s Future: Surviving or Thriving?

Despite his critical stance, Atlas does not foresee an imminent collapse of XRP. Instead, he describes it as a “zombie asset,” characterized by its reliance on belief, liquidity, and supply control rather than an increase in utility. Currently, he suggests that XRP’s price is primarily influenced by speculation rather than actual usage.

The ongoing legal situation surrounding Ripple has also played a role in XRP’s endurance. Following a lawsuit from the U.S. Securities and Exchange Commission (SEC) in December 2020, XRP’s price plummeted from approximately $0.60 to a low of $0.17 as exchanges began to delist it. With the conclusion of the SEC lawsuits, XRP’s value has rebounded, trading around $1.85, with its market cap now exceeding $111.89 billion.

In summary, while Ripple’s growth as a blockchain payments company continues, the future of XRP remains uncertain. Atlas’s analysis underscores the necessity for a more substantial connection between XRP’s market performance and its practical utility in the financial ecosystem.