In a recent statement, Shannon Thorp, a treasury officer at Wells Fargo, made a striking price prediction for XRP. The visionary executive predicted that XRP’s value could surge to between $100 and $500 in the short term, specifically within the next 4 to 7 months. This price increase prediction represents a staggering increase of 14,200% to 71,400% from the current trading value.

Finding the best model

Thorp acknowledged that there is a long-standing debate within the XRP community, with one faction relying solely on chart patterns and trends exhibited by Bitcoin to arrive at short-term price predictions. On the other hand, another faction emphasizes the importance of XRP’s utility, arguing that its partnerships and replacement of outdated systems will be key drivers of its price. However, Thorp offered a novel perspective, emphasizing that XRP is not a security and that price predictions based on traditional securities logic are counterintuitive to the original vision put forward by the Ripple team.

Thorp expanded on her rationale, introducing the concept of liquidity strength (LS) as a key metric to consider when predicting the future value of XRP. To determine the token’s price range, she considered total supply, including circulating tokens, burned tokens, tokens owned by banks, governments, and individuals, and assumed that Ripple had released all XRP from escrow.

Thorp said that if a company owned all 100 billion tokens, its liquidity strength (LS) would be $100 billion to $500 billion at a price range of $1.00 to $5.00. However, she believes such a calculation fails to take into account the potential growth of the economy, messaging and settlement activities, and the continued benefits of using XRP.

Drawing on real-world examples, Thorp compared the token’s potential to that of SWIFT, which processes about 44.8 million messages per day. Even if Ripple could capture only 30% of SWIFT’s daily value (which she estimated at $7 trillion), XRP would be worth a staggering $2.1 trillion per day (about 13.2 million messages). Given XRP’s fast settlement time of 1 to 5 seconds, liquidity does exist. However, Thorp highlighted the challenges of conducting large transactions with limited liquidity strength, as this would likely require banks to hold a large portion of XRP.

XRP Price Prediction

To come up with her price prediction, Thorpe took into account various factors, such as all global banks, burned XRP, individual holdings, XRP allocated to large banks and creators, and tokens available on liquidity centers and exchanges. She estimates that at any given time, there could be 50 to 75 billion XRP supporting liquidity strength (LS). When distributed across approximately 300 to 1,000 different banks, liquidity providers, and governments, each would generate approximately $75 million in XRP/USD per institution.

Considering that JPMorgan Chase is a top bank with a daily trading volume of more than $8 trillion, Thorp assumes that even if Ripple only captures 10% of this market (or $800 billion), the 75 billion XRPs in circulation will not be enough to effectively transfer such a huge amount of money. Thorp admits that this estimate only applies to cross-border transactions and does not include derivatives, real estate, CBDCs, technology parallels, and NFTs.

Having laid the foundation, Thorp made a price prediction, predicting that XRP’s price range will be between $100 and $500 in the short term (4-7 months). Her calculations are based on a Liquidity Strength (LS) scenario, where an XRP price of $100 and a supply of 50 billion XRP would generate $5 trillion in LS, while $500 would generate $25 trillion in LS.

Thorp said this valuation gives the market breathing room, allows for growth, and ensures that no single entity needs to hold billions of XRP to operate day-to-day. In addition, Thorp believes that a potential "switch flip" moment could trigger a price surge - an event similar to a revaluation of XRP similar to how gold is valued.

It’s worth noting that Thorp’s speculation sets an exciting stage for XRP’s future, though it’s important to remember that her prediction is based on several assumptions that may or may not come to fruition. As always, those interested in investing should perform due diligence, consider multiple viewpoints, and make an informed decision.

At the time of writing, XRP is trading at $0.7051.