The analyst explains why XRP soared so easily despite its large market cap

XRP has seen a notable price rise recently, attracting attention as it continues to rise despite its large market capitalization.

For context, XRP By 194% over the past eight weeks. In comparison, Bitcoin It took the whole year for 2024 for a gain of 124%. In other words, XRP achieves in weeks what Bitcoin takes several months to achieve in terms of price action.

according to According to cryptocurrency analyst Dom, the rapid price movements of XRP are due to a combination of low supply and weak order books. In his view, these factors make XRP more vulnerable to volatility.

XRP prices are easier to move than Bitcoin

In a recent tweet, Dom clarified that the market value of an asset is not particularly necessary when determining the rate of price movements. Instead, the liquidity in the order book determines how easily the price can move.

Using Binance’s perpetual markets as an example, Dom determined the amount of capital needed to move BTC and XRP prices by 25%.

Specifically, he noted that it would take about $985 million to liquidate 9,040 BTC and raise the price by 25%. In contrast, it only takes $59.73 million to liquidate $19.88 million Ripple price Achieving price gains of 25%.

According to his calculations, it is about 16.5 times easier to create a 25% jump in the price of XRP than it is in Bitcoin, and this is solely due to the thinness of the XRP order book.

The role of liquidity and supply in XRP’s sharp movements

Moreover, Dom Argue The sharp increases in XRP prices are largely due to a thin order book, with limited liquidity on the sell side creating a “vacuum effect.” When significant buying pressure arrives, the price jumps vertically until it finds resistance from more massive selling walls.

This phenomenon is most evident in cheaper assets such as XRP, which have a smaller liquidity pool than more expensive assets such as XRP Bitcoin.

Furthermore, Dom emphasized that XRP holders tend to have long-term views. Many hold the asset after years of volatility. Hence, it is unlikely to be sold after a 5x gain, especially since XRP is still below its peak.

As a result, supply remains constrained, which contributes to reduced selling pressure even during large price increases.

Ultimately, Dom concluded that XRP’s price movement is a result of underlying supply and demand mechanisms. The asset is likely to see significant resistance once the largest supply enters the market. At that time, it will become clear in the order books as sell orders accumulate.