Ripple could potentially boost the value of its $XRPholdings by $20 billion, based on a market strategy proposed by Patrick L. Riley.

Riley suggests Ripple’s $XRPholdingand substantial cash position could allow a $1 billion buy to lift prices by $0.50, adding $20 billion in value. He compared this to Michael Saylor’s Bitcoin strategy, but an extensive assessment reveals holes in his theory.

Key Points

• Ripple is witnessingrenewed criticismsover its extensive $XRPholdings after recently moving75 million tokens.
• According to Riley, Ripple holds 39 billion $XRPand about$5 billion in cash, and the firm could leverage this to growits financial standing.
• Riley claims a $1 billion buy could raise $XRPby $0.50, adding $20 billion to Ripple’s total balance.
• The expected price impact may not play outdue to factors likeslippage and liquidity changes.
• Also, sustaining gains remains uncertain, with reflexivityrisks if the $XRPprice declines after leverage.

The $1 Billion $XRPBuy Thesis

Riley, an American veteran, discussed this in a recent commentary amid renewed criticisms surrounding Ripple’s large $XRP$XRPholdings, particularly after the company moved 75 million $XRPin a recent transfer, sending 50 million tokens to Coinbase.

The market commentator argued that Ripple’s position is actually a major balance sheet opportunity that the firm could leverage. According to him, Ripple holds about39 billion $XRPand about$5 billion in cash, and this givesit enoughresources to move the needle onits own financial standing.

Riley claimsthat if Ripple spent $1 billion buying up the lowest available $XRPliquidity in the market, it would push the price up by roughly $0.50. He argues that this price increase would add about $20 billion in value to Ripple’s nearly 40 billion $XRPholdings.

The veteran further suggested that Ripple could then borrow against the newly appreciated value of its holdingsand use the collateral to pushits financial position higher.“That is the purpose of Evernode,” he added.

Riley compared this to what Michael Saylor does with Bitcoin at Strategy. He clarified that his point is mostly about Ripple acting in its own corporate interest, the same waySaylor does with Bitcoin. As a result of this possibility, Riley believes Ripple’s extensive $XRPholdings could be bullish for the $XRPmarket.

Important Caveats to Note

While Riley’s theory soundsbullish on paper, some partsof the analysis have someshortcomings.His claim that a $1 billion purchase would produce a neat $0.50 price move suggests that the market stands still, which may not hold up in practice.

Notably, markets respond to large orders in real time, as algorithmic traders, market makers, and other market participants quickly changetheir positions.This means sell walls can move higher, and thin liquiditycan disappear before a large order even finishes filling. The actual capital necessary to achieve that projected price move could turn out to be much more than $1 billion.

Meanwhile, there is also the issue of slippage, where a large buy order gets filled at progressively worse prices as it works through available liquidity. At the scale Riley describes, there could bea largegap between the expected price and the actual average fill price.

Also, even if the $0.50 $XRPmove happened, holdingthat price level would require sustained buying pressure.Notably, profit-takers and short sellers typically respond quickly to sharp price spikes, which means the market could erase the paper gain on Ripple’s holdings if there’s no continued capital commitment.

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