Ripple CTO Warns of Potential Volatility Ahead of RLUSD Launch: “Don’t FOMO into a Stablecoin”

David Schwartz, the Chief Technology Officer of Ripple, has issued a cautionary statement about the potential for price fluctuations and supply constraints for RLUSD, Ripple’s USD-pegged stablecoin, ahead of its launch. He advised investors to be cautious about succumbing to the fear of missing out (FOMO) on what is set to be a new addition to the stablecoin market.

Schwartz emphasized that although RLUSD is designed to maintain a $1 parity with the US dollar, investors should anticipate volatility in its early days due to supply and demand imbalances. This, according to Schwartz, is typical for new stablecoins, as the market adjusts to the circulating supply. He reassured investors that once these market dynamics settle, the stablecoin should stabilize closer to its intended $1 value.

The Ripple CTO responded to concerns regarding early bids for RLUSD tokens that seem to be boosting its value beyond its intended peg. A report indicated that a portion of RLUSD was priced at 511 XRP, worth over $1,200, on a Ripple wallet called Xaman. Schwartz clarified that such inflated prices likely reflect novelty value, rather than the true market price, as people vie for the chance to hold some of the first-ever RLUSD tokens.

Ripple is waiting for final regulatory approval from the New York Department of Financial Services before launching RLUSD. The company plans to use the stablecoin to further strengthen its cross-border payment solutions and provide liquidity to financial institutions. Ripple CEO Brad Garlinghouse has stated that RLUSD is expected to be released soon after receiving the necessary regulatory green light.

Ripple views RLUSD not as a competitor to XRP, but as a complementary asset that will work in tandem with XRP. The company’s strategy involves leveraging XRP’s vast exchange network to help stabilize RLUSD’s price and ensure liquidity. Schwartz emphasized that institutional participants will be the main target for RLUSD, with beta testing already showing positive results for preventing depegging and enhancing global liquidity in the long term.

While the launch of RLUSD is an exciting development for Ripple and the broader crypto market, David Schwartz’s warning is clear: early volatility is expected, and investors should approach the stablecoin cautiously. As the market adjusts to the new asset, Ripple aims to provide added stability and liquidity, with long-term goals focused on strengthening institutional adoption and cross-border payments.