A few days after obtaining the approvals in New York, Ripple has warned that its stablecoin might experience volatility when it hits the market. David Schwartz, the company's Chief Technology Officer, also cautioned investors about potential supply shortages while advising against fear-of-missing-out (FOMO) behavior.

High Pre-Launch Bids

Schwartz's remarks followed reports of unusually high pre-launch bids for RLUSD, the USD-pegged stablecoin designed for Ripple's cross-border payment solutions. Ripple mentioned that the volatility, which hints at heightened speculative interest, will fade. In a post on social media X, it assured users that the stablecoin Stablecoin Unlike other cryptocurrencies like Bitcoin and Ethereum, stablecoins are cryptocurrencies that have been designed to keep a stable value. Placing a greater emphasis on stability over volatility can be a huge draw for some investors. Many individuals can be turned off from large swings and uncertainty presented by cryptos relative to other traditional assets.Stablecoins control for this volatility by being pegged to another cryptocurrency, fiat money, or to exchange-traded commodities, including Unlike other cryptocurrencies like Bitcoin and Ethereum, stablecoins are cryptocurrencies that have been designed to keep a stable value. Placing a greater emphasis on stability over volatility can be a huge draw for some investors. Many individuals can be turned off from large swings and uncertainty presented by cryptos relative to other traditional assets.Stablecoins control for this volatility by being pegged to another cryptocurrency, fiat money, or to exchange-traded commodities, including Read this Term will stabilize once it achieves equilibrium in supply and demand.

As RLUSD goes live, there may be supply shortages in the very early days before the market stabilizes. There actually is someone willing to pay $1,200/RLUSD for a tiny fraction of one RLUSD. Tools will show you the highest price anyone is willing to pay, even if it's just for a… https://t.co/LOx4rGiiiJ

— David "JoelKatz" Schwartz (@JoelKatz) December 15, 2024

Schwartz explained that pre-market bids were artificially inflating RLUSD's value. One bid valued a fraction of RLUSD at $1,200, well above its intended 1:1 parity with the US dollar. Schwartz attributed this anomaly to early traders seeking the symbolic honor of purchasing the first RLUSD units.

"As RLUSD goes live, there may be supply shortages in the very early days before the market stabilizes. There actually is someone willing to pay $1,200/RLUSD for a tiny fraction of one RLUSD," he wrote. "Tools will show you the highest price anyone is willing to pay, even if it's just for a tiny bit. Maybe someone wants the "honor" of buying the first bit of RLUSD on the DEX."

Regulatory Approvals

Last week, Ripple secured final approval for RLUSD from the New York Department of Financial Services, after launching the token in October. The company aims to use RLUSD, alongside its XRP token, to enhance cross-border payments and improve liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term in global markets. The firm announced that exchange and partner listings for RLUSD would go live soon.

"But rest assured, the price will come back to very close to $1 as soon as supply stabilizes. If it doesn't, something is very seriously wrong. If you want to spend a lot of money to get a tiny bit of RLUSD before anyone else does, you can, Schwartz added."

"But please don't expect the price to stay over $1 once things stabilize, which I expect they will do very quickly. Please don't FOMO into a stablecoin! This is not an opportunity to get rich."

Ripple designed RLUSD to serve institutional clients, complementing the broader adoption of XRP. The stablecoin aims to bridge fiat currencies and digital assets by enabling better cross-border transactions.