Why would it cost more than $1 in the first place?

Ripple's highly anticipated stablecoin RLUSD will launch in 2024 and the crypto community is buzzing with anticipation. As the release date approaches, there are expectations, especially in the XRP community. While many are eager to get their hands on the new stablecoin, Ripple's CTO, David Schwartz, shared some tips for buyers.

Why RLUSD can initially cost more than $1.

One of the key points Schwartz made was that the RLUSD stablecoin may experience a temporary price spike when it first launches. Because there may be a shortage of supply in the early stages. Some buyers may be willing to pay more than the supposed $1 value, especially if they want to be among the first to own RLUSD. For example, during pre-market trading, RLUSD traded at 511 XRP, which equates to $1,231—far above its $1 target.

Schwartz explained that this price increase is not a sign of long-term value, but a temporary phenomenon. When a new asset is launched, especially a stable coin, there can be an imbalance between supply and demand, which causes inflation. These cones are not unusual, but they should not be mistaken for a profit opportunity. Schwartz confirmed that the price will return to $1 once the market stabilizes.

The analyst warns of the potential for FOMO

Ripple's CTO strongly advises against buying RLUSD for fear of missing out (FOMO). He emphasized that the main purpose of the stablecoin is to maintain a uniform value of $1, and any upward price movement may be due to supply issues or short-term demand. Schwartz cautions that if someone is willing to spend a lot of money to buy a small fraction of RLUSD early on, they shouldn't expect to make a profit from it.

He also noted that profitable traders exploiting price differences in various markets will quickly help correct any price differences by bringing the RLUSD back to the target $1 price point.

Future prospects for stablecoins

Despite the early price fluctuations, Schwartz believes in the long-term potential of the fixed coin market. Ripple sees RLUSD as a credible player in the space, and as stablecoins become increasingly popular, Schwartz predicts the market could exceed $2 trillion by 2028.

In short, while the launch of RLUSD may cause some short-term price volatility, the goal of Stablecoin is to maintain stability. Buyers should be patient and avoid buying in haste as prices will stabilize after supply and demand balances out.

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