The Need for Higher XRP Prices to Support Bank-Scale Transactions, According to Jake Claver

XRP has sparked ongoing discussions about its market cap, but Jake Claver, CEO of Digital Ascension Group, believes the essential question is whether the network can effectively handle institutional-level payment flows without incurring excessive execution costs. In a video released on March 26, Claver argued that market cap is an inadequate measure of a digital asset’s true functionality and stated that XRP's price must significantly increase to facilitate bank-scale settlements.

Key Takeaways

Jake Claver argues that XRP's market cap is insufficient to gauge its ability to support large-scale transactions.
He emphasizes the importance of a stable price and liquidity, likening XRP to a collectible with limited trading availability.
Claver highlights the challenges posed by slippage and market depth in adopting XRP for institutional use.
The need for higher XRP prices is framed as a structural requirement rather than speculative hype.

XRP Needs Higher Prices To Handle Bank-Scale Flows, Jake Claver Argues

Claver introduced his concept of a "liquidity index," aimed at measuring "the true utility and stability of a digital asset" beyond its market valuation. This index takes into account six key factors: market depth, liquidity continuity, slippage, available supply, settlement speed, and access. He emphasized that the main requirement for a payments asset is not speculative growth but a price high enough to make substantial transactions feasible.

Claver stated, “Assets that will drive the future financial system can’t simply be volatile speculation; they require a stable, high price to operate effectively on a global scale.”

The Case for a Higher XRP Price

Claver’s analysis begins with the aspect of supply. He likened XRP to a collectible with limited availability, highlighting that it’s not just total issuance that matters, but how many tokens are available for trading. As demand increases and more tokens are effectively removed from circulation, the remaining supply—the float—becomes more valuable. He directly connected this to XRP’s payment model, detailing it as a scenario of "fixed supply, growing demand," where less availability on the market results in a higher price.

Next, Claver addressed market depth, which he describes as a significant limitation for institutions. He compared XRP liquidity to a pool of water that must be deep enough to accommodate a substantial entrant without causing disruptions. For a bank wishing to transfer $100 million abroad using XRP, a shallow market would lead to complications in pricing and execution.

“If XRP is priced at $1 each and you need to move $100 million, you would need a total of 100 million tokens available to manage that transaction. However, if the price rises to $100 each, you would only require a million tokens for the same transfer,” Claver explained.

His reasoning extends to slippage, which he identified as a major reason why banks have not fully adopted cryptocurrency for large transactions. A $100 million transaction using XRP today might incur around 10% slippage, resulting in a loss of roughly $10 million, while traditional equity markets process similar transactions at less than 0.5%. To bridge this gap, he suggested that order book values would need to increase by 20 to 100 times, putting the onus on price to achieve this change.

Claver also mentioned that XRP's available supply could tighten further down the road. He pointed out that exchange-traded funds (ETFs), bank treasury reserves, and decentralized finance (DeFi) pools could lock away tokens, reducing liquidity. In this situation, rising demand could clash with a dwindling float, causing prices to jump significantly rather than increase gradually.

Speed is another critical element of Claver’s argument. He noted that XRP's settlement time of 3 to 5 seconds allows for more efficient capital turnover compared to slower networks. Nonetheless, he cautioned that speed alone is not sufficient. “If each trade costs you 1 to 2% in slippage,” he said, “even a speedier process results in losses.”

Claver concluded that market cap provides only a superficial view of a digital asset's functionality, as it assumes every token could be traded at the last price. In his view, the true test for a network designed to process extensive cross-border transactions is whether its order books can handle institutional volumes without eroding capital. Thus, higher XRP prices are not merely hype but a necessary condition for the network to fulfill the role its supporters envision.

As of the last update, XRP was priced at $1.3337.

XRP price chart XRP falls below the 200-week EMA; 1-week chart | Source: XRPUSDT on TradingView.com