Document Proposes How RLUSD Could Boost XRP Price to $5

A community-generated document has proposed an avenue through which the Ripple stablecoin RLUSD could boost the XRP price to as high as $5.

A document circulating in the XRP community presented a theory that institutions could use RLUSD to execute large XRP buy orders, potentially pushing prices as high as $5.00 in a staged example involving a $1 billion deposit. 

However, the practicality of the model remains highly questionable, considering issues surrounding real-world trading activities, arbitrage opportunities, and the fact that switching from USD to RLUSD does not automatically create new demand for XRP.

Key Points

• Following the launch of RLUSD in December 2024, some proponents suggested that the stablecoin could compete with XRP for institutional adoption.
• However, a community-generated document recently proposed how RLUSD could complement XRP and boost its value.
• The proposal suggests banks could deposit $1 billion into RLUSD and use it to buy XRP on exchanges.
• In the example order book, 100,000 XRP sit at $0.50, 50,000 at $1.00, and 20,000 at $5.00.
• A large RLUSD buy order would clear lower-priced sell orders and push XRP’s price toward $5.00 or higher.
• However, the proposal has issues surrounding real-world institutional trading activities and the fact that using RLUSD instead of USD does not lead to new demand for XRP.

How the Proposal Says RLUSD Boosts XRP Price

Xaif, a known XRP community figure, recently shared the document. For context, the material suggested that RLUSD could help drive XRP’s price higher by making it easier for institutions to accumulate large amounts of the token.

Notably, it proposed that instead of banks using regular U.S. dollars to buy XRP, they would first convert their funds into RLUSD. Because RLUSD is pegged to the dollar, it keeps a stable value during the transaction process.

The theory claims this stability would allow institutions to make large XRP purchases without worrying about sudden price swings in their base currency.

The proposal then suggests that if these institutions use RLUSD to place very large buy orders, they will quickly absorb the cheapest XRP sell orders available. As buyers remove those lower-priced offers, the price would climb to the next available level. If liquidity at lower prices remains thin, the price could jump sharply in a short period.

The document argues that using RLUSD instead of traditional fiat trading pairs like USD/XRP could speed up transactions and improve efficiency. 

Amid the proposed XRP price spike, institutions might still continue buying and using it because of its speed and lower costs for cross-border payments. In this situation, RLUSD acts as a steady middle layer that keeps the whole process running smoothly.

XRP Price Boost to $5

To make the idea clearer, the document presented an example. In the first step, a bank deposits $1 billion into RLUSD. Further, the institution holds that RLUSD in a Ripple-supported wallet or on an exchange, ready to use.

Next, the bank uses RLUSD to buy XRP. The example assumes a specific order book involving 100,000 XRP offered at $0.50, 50,000 XRP at $1.00, and 20,000 XRP at $5. 

With a $1 billion buy order, the bank wipes out all the XRP listed at $0.50, then clears everything at $1.00, and begins purchasing into the $5 range. According to the proposal, this action pushes the price to $5 or higher because no cheaper sell orders remain. The new higher level then becomes the reference point for future trades.

After the purchase, the bank uses XRP to settle international payments, taking advantage of its speed and lower transaction costs. Meanwhile, RLUSD continues to serve as the stable asset that makes repeated large transactions easier to manage.

Important Caveats

However, the proposal has some major flaws. First, it assumes institutions would place one huge order directly into a thin public order book. In reality, large buyers usually break orders into smaller pieces, use special routing strategies, or trade over-the-counter to avoid pushing prices up too quickly.

Secondly, arbitrage activity may not allow such sudden spikes. Practically, if XRP’s price suddenly jumped from $0.50 and $1.00 to $5.00, traders on other exchanges would likely leverage this. They would add new sell orders and take advantage of price gaps between platforms. This could limit extreme price spikes.

Finally, the proposal mixes up the payment method with actual demand. Switching from USD to RLUSD does not automatically create new interest in XRP. Institutions still need a strong reason to buy and hold XRP in the first place. If real demand is absent, simply changing the transaction currency may not be enough to sustain a move toward $5.