The post Ripple’s CTO Issues Warning on RLUSD as FOMO Increases appeared on BitcoinEthereumNews.com.

Ahead of the launch of Ripple’s new stablecoin, RLUSD, Ripple’s Chief Technology Officer David Schwartz revealed a cautionary note on the volatile and irregular pricing that potentially awaits during the new coin’s initial release. With growing excitement and speculation surrounding the stablecoin’s debut, it comes as a warning from Schwartz. source: X Anticipated Supply Shortages and Initial Price Volatility In particular, David Schwartz says that, as RLUSD goes live, it could face severe supply shortages. This could lead to very temporary price spikes far above the token’s printed value of $1 peg to the U.S. dollar. An illustrative remark by Schwartz was that there is someone who pays $1,200/RLUSD for a very tiny fraction of one RLUSD. The fact that such quarters of the market are willing to pay a premium to be among the first holders of the new stablecoin, despite the precautionary note, raises the primary point that this stablecoin already has a lot of interest and there is no doubt that it will enjoy wide acceptance in the coming months. However, as the CTO noted, this could produce somewhat odd market behavior. This is whereby the tools and exchanges appear to offer extraordinarily high bids for very small amounts of RLUSD. That can also create the wrong impression about the value of the stablecoin on the market, in particular for an average investor who is not remotely familiar with the details around the kinds of listings. The Stabilizing Role of Arbitrage These initial fluctuations will likely be arbitaged away by arbitrageurs. On dynamics, Schwartz explained: ‘Changes in prices around launch in the short term could be due to supply or demand shortages, but those changes shouldn’t last very long as arbitragers attempt to fix the market.’ These market participants will take advantage of the difference between the…

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Filed under: News - @ December 17, 2024 7:27 am