Ripple CTO warns of RLUSD price fluctuations at launch, assuring investors that price will stabilize at $1 after adjustments.
Ripple Chief Technology Officer, David Schwartz, recently addressed concerns about potential price fluctuations for RLUSD, Ripple’s US dollar-pegged stablecoin. In a post on X on December 15, Schwartz warned of possible “supply shortages” when the coin goes live. He said that, in the first place, price may not be very smooth because demand is usually high while supply is low.
Schwartz pointed out that some buyers could get extremely high prices, like $1,200 for a mere slice of RLUSD. These inflated prices may appear in market tools as what one is willing to pay for a product or service. He noted that some buyers may be willing to be part of the first token sale of RLUSD, to be among the first to be associated with it. But he was quick to remind everyone that these prices were not going to be permanent in the market. Once supply goes up, the price should revert to $1 pretty much immediately, if not sooner.
Ripple CTO Assures RLUSD Will Return to $1 After Initial Fluctuations
He also stressed that the primary function of a stablecoin is to maintain the stability of the asset’s price. Consequently, if RLUSD retains its position above $1, then there has to be an issue with the market. Schwartz also admitted, that during the initial stages of the product life cycle fluctuations in supply and demand may lead to temporary changes in price. Still, he says he expects these changes to be temporary. Arbitrage traders who make their living by exploiting price discrepancies will probably correct the market soon and bring the price back to standard.
Schwartz specifically cautioned against FOMO (fear of missing out). He warned the investors against purchasing the RLUSD at high prices expecting a short-term gain. The stablecoin is intended to be stable. That is why a short-term increase in the price should not be viewed as a way to make money. He said though early adopters tend to pay a fluctuating price, the aim is to set the price at $1.
Schwartz finally left his audience with several things on his mind, the last of which was to be patient. He also assured the community that after the launch phase of the RLUSD, the prices should stabilize at the desired price. He said that the changes that occurred during the first few days were just the adjustments made in the market. Looking at the long-term, as market conditions establish, the price should also reflect the purpose of the stablecoin—to be constant and predictable.
