Recently, Phil Kwok, co-founder of EasyA, showcased a new tool for modeling the impact of orders on XRP's market cap.
What is the Market Cap Multiplier?
The tool presented by Kwok simulates how different capital inflows can lead to exponential increases in XRP's market cap. This phenomenon occurs when a relatively small amount of capital causes a disproportionately large increase in market capitalization.
Impact on XRP's Price
When Kwok created the video, XRP was priced at $2.97 with a market cap of $176.1 billion. For instance, a $10 million buy order could increase XRP's market cap by $1.78 billion, bringing it to $177.9 billion with a 178x multiplier.
Scenarios with Large Inflows
As the buy order size increases, XRP's price also rises. For example, a $600 million buy order could raise XRP's price to $15 and its market cap to $889.5 billion with a 1189x multiplier. At $5 billion, the market cap could exceed $3.6 trillion.
Kwok's work highlights the significant impact of liquidity constraints on digital asset valuations and opens new avenues for market trend analysis.