Ripple’s investment arm, Xpring, wrote that Bitcoin and Ethereum traders are transitioning to XRP in network bottlenecks.
Xpring, the investment arm of Ripple, shed light on crypto investors’ reactions in past crises in a new blog post. The firm states that Bitcoin and Ethereum investors have switched to XRP as a trading tool during network bottlenecks in times of crisis.
XRP was preferred more during the big crash in Bitcoin
Transaction fees for both Ethereum and Bitcoin rose almost 5 times during the major collapse on March 12, Xpring said. This price increase led to XRP being preferred more for withdrawals in exchanges.
The article said, “We have obtained evidence that many users, especially Ethereum investors, have shifted to XRP for transfers, and we were not surprised when we saw this.”
Xpring explained that XRP was created as a value transfer tool, so this sudden change did not surprise them. Xpring also tried to verify its claims with data. The graph below shows that as the fee per transaction in Ethereum increases, cross passes towards XRP increase. The chart here is for times when prices have been rising due to excessive density in the Ethereum network.
To consolidate this measurement, Xpring took an average price and further strengthened this result.
During the days when Ethereum wages were flying, significant increases were also recorded in XRP transactions between exchanges. Thus, in general, the increase in the XRP volume was realized in harmony with the increase in Ethereum fees.
Pearson correlation value is 0.7. This indicates a statistically strong and positive fit.
As an example, Ethereum’s transaction fees increased by 400 percent on March 12, 2020. On the same day, XRP transactions saw a 226 percent increase. According to Xpring, when Ethereum transaction fees are at a normal level, the correlation is also weakening:
“While Ethereum transaction fees are at normal level (mid to high), the correlation seems to be weak. When ETH is too low or too high, that is, when transaction fees increase, the correlation becomes very strong. As a result, if Ethereum transaction fees are low, XRP traversal is also decreasing ”
In the article, Xpring stated that XRP transfer is always cheap, whatever the conditions on the market, and that this is an advantage for the entire crypto market.