Ripple's Chief Technology Officer David Schwartz cautioned investors against price volatility for RLUSD as it prepares for launch.
On December 15 Post On X, Schwartz addressed concerns about the initial launch of the RLUSD market, admitting that there could be a shortage of initial supply that could push the price higher than the target of $1 to the US dollar.
No announcement has yet been made as to when RLUSD will go on the market. Ripple did not immediately respond to a request for comment.
In August, Ripple announced that it had started testing the new A stable coin In XRP Ledger (XRPL) and Ethereum Main network. Ripple Plans To use RLUSD to provide cross-border payment solutions to its international users.
Schwartz cited pre-market bids valuing the RLUSD as high as $1,244, driven by buyers looking to claim their “glory” by purchasing the first units of the stablecoin.
“There is someone willing to pay $1,200/RLUSD for a small fraction of one RLUSD,” Schwartz wrote, referring to the Ripple wallet listing.
However, he said such high prices would be short-lived, “when the supply stabilizes, the price will go back very much to $1.” If not, something is seriously wrong.”
Schwartz described market forces as playing the role of arbitrageurs in stabilizing the RLUSD price. Arbitrage is expected to quickly normalize the price of RLUSD by selling overvalued and buying below $1, adjusting supply and demand.
“Please don't FOMO into Stable Coin! This is not an opportunity to prosper,” Schwartz added.
The warning comes as Ripple prepares to release following RLUSD. Approval December 11 by the New York Department of Financial Services.
According to Schwartz, the main purpose of stablecoins is to encourage investors to have a “stable value.” While there may be short-term price fluctuations at launch, a stablecoin is designed to maintain its $1 bond.
Meanwhile, XRP get up Earlier this month, it hit a seven-year high, rising to $2.74 – the highest price since January 2018 – and a five-fold increase in the past 30 days.
XRP It was down nearly 1% the previous day, trading at $2.41, according to Coingeco Data.
Edited by Sebastian Sinclair
Daily Debrief Newspaper
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