XRP Market Cap Multiplier Tool. Here's How It Works

In a recent post on X, Phil Kwok, co-founder of EasyA, showcased a tool he designed to model XRP’s market cap multiplier effect.

Kwok shared a video displaying various buy order sizes and their potential impact on XRP’s market cap, offering an analytical perspective on how limited order book liquidity can significantly amplify price movements.

Understanding the Market Cap Multiplier

The tool presented by Kwok simulates how capital inflows of different magnitudes can result in exponential increases in XRP’s market cap.

This happens due to the market cap multiplier effect, which refers to the phenomenon where a relatively small amount of capital inflow causes a disproportionately large increase in market capitalization.

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This effect arises because buy orders consume available liquidity on the order book, forcing the price higher as orders are filled at increasing levels, and significantly expanding the total market cap with modest inflows.

Potential Impact on XRP’s Price

When Kwok made the video, XRP was trading at $2.97, with a circulating supply of 59.3 billion tokens. Based on these figures, its market capitalization stands at approximately $176.1 billion. A relatively modest $10 million buy order could increase XRP’s market cap by $1.78 billion, putting the market cap at $177.9 billion with a multiplier of 178x.

A larger $150 million buy order results in a multiplier effect of 803x, pushing the market cap up by $120.4 billion to $296.5 billion. This scenario would also send XRP to $5, marking a new all-time high for the digital asset.

Scaling the Effect with Larger Inflows

As the buy order size increases, the price of XRP rises accordingly. A $600 million buy order elevates XRP’s price to $15 and expands the market cap by $713.4 billion, resulting in a total market cap of $889.5 billion, a 1189x multiplier. A $1 billion buy order raises the price to $20 and pushes the market cap to $1.27 trillion, a 980x increase.

Larger inflows create more dramatic results. At $5 billion, the tool predicts XRP’s market cap could exceed $3.6 trillion, with a 671x multiplier and each token priced at $60. At this level, XRP will flip Bitcoin and become the largest cryptocurrency in the market.

The most extreme scenario displayed is a $10 billion buy order, which would drive the price to $90 and the market cap to over $5.3 trillion, a 516x increase. These calculations emphasize the outsized impact of liquidity constraints on digital asset valuations. Kwok noted that he has made the tool open source, allowing others to replicate and explore similar multiplier scenarios using real-time market data.

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