Fair Value Calculator Places XRP At $5.38 Amidst $50 Billion Trading Volume

Republished By Plato

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The Athey and Mitchnick fair value calculator for XRP shows that the crypto asset would be valued at over $5 at a volume of $50 billion.

The price of XRP has traded below the $1 mark since December 2021, with the fifth largest cryptocurrency locked between $0.3 and $0.9 for the majority of the past two years.

However, the famous Athey and Mitchnick fair value calculator suggests that XRP is still grossly undervalued and could be worth $5 based on certain metrics.

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Introduced in 2018, the metric is based on a research paper released by then-Stanford professor Susan Athey and Stanford MBA candidate Robert Mitchnick. The paper sought to assess XRP’s true value, arguing that the cryptocurrency was undervalued.

Following the introduction of the research paper, developers built a calculator that adopts the basic parameters that Athey and Mitchnick used to calculate XRP’s actual value. Using this calculator, The Crypto Basic recently computed XRP’s potential value if volume rises significantly in the next two years.

Key Parameters

For the latest calculations, The Crypto Basic inputted certain required parameters. For instance, we put the total estimated daily transaction volume for XRP at $50 billion.

This figure is slightly higher than the highest-ever recorded XRP daily trading volume of $36.95 billion in April 2021. Hence, such volume is undoubtedly realistic if market sentiment reaches peak euphoria.

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Notably, we did not change the 5-day average time provided by the calculated as the average time between the transfer of one XRP between wallets. This metric measures how long it takes before a user moves the XRP they have received in their wallet, for which five days represents a fair timeline.

Meanwhile, we put the store of value in USD figures at $0.08 billion ($80 billion). For this figure, we assume that XRP will hit a market cap of $80 billion within the next two years, a realistic figure given the asset’s market cap rose as high as $94.6 billion and $81 billion in 2017 and 2021, respectively.

Moving forward, we put the circulating supply for XRP at 59 billion tokens. This assumes the regular 200 million injection of new coins from escrow. Ripple typically unlocks one billion coins monthly. However, it returns 800 million tokens to escrow and retains the rest.

Hence, we assume that this flow will be maintained over the next two years, bringing approximately 4.8 billion coins into circulation to add to the current circulating supply of 54.3 billion.

Lastly, we set the interest rate to discount value at the default value of 5. This metric seeks to calculate the average interest rate on holding XRP between the two defined periods, which is between the present time and the next two years.

XRP To Be Valued at $5.38 Per Coin

Using the six core metrics, the XRP fair value calculator predicts a $5.38 price for XRP if the cryptocurrency could see its trading volume go as high as $50 billion within the period. This would represent a more than 1000% increase from XRP’s current price of around $0.51.

Although such an outcome is not guaranteed, a complete victory or settlement in Ripple’s ongoing lawsuit with the United States Securities and Exchange Commission (SEC) may provide a springboard. Ripple’s chief legal officer expects the case to climax in 2024.

Additionally, many analysts note how the landmark lawsuit may have prevented XRP from reaching its full potential during the last crypto bull market. If the crypto market goes on a 2-year run as many predict, XRP may have its moment again in the spotlight.

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Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.

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