Valhil Capital has released a new research paper assessing the fair value of XRP, and the results are astronomical. The private equity firm explains in the research paper using six pricing models that the fair value is somewhere between $3,500 and $21,900 per token.
So, as one community member pointed out, it would only take 77.9 XRP to become a millionaire at the average price of $12,822. Even at the most conservative forecast of $3,500, 285.8 XRP would be enough to become a dollar millionaire.
XRP price to the moon?
Molly Elmore, Chief Marketing Officer (CMO) at Valhil Capital, shared the white paper titled “A Comprehensive Approach to Determining the Fair Market Value of XRP” via Twitter. The document, she says, is the result of an extensive two-year investigation conducted by a “larger group of individuals,” the “Confidence Committee.”
The origin of the effort was the U.S. Securities and Exchange Commission’s (SEC) lawsuit against Ripple, which raised the question: If the SEC’s lawsuit harms retail investors, how can the financial loss be calculated? To do this, Valhil Capital states that it is necessary to examine the extent to which the lawsuit prevented the adoption of the XRP Ledger from realizing its intended use case.
This brought into question the concept of fair market value, and how it differs from market value. To assess the fair value, the Confidential Committee set up a smaller Valuation Committee in the fall of 2022, composed of people who had experience with quantitative and financial valuations.
As a result, the Committee identifies six pricing models: Pipeline Flow Model, Athey and Mitchnick Model, 99-Year Golden Eagle Model, Discounted Cash Flow Model, Collateral Model, and a Quantum Liquidity Model. All models address different factors including market conditions, supply and demand and other relevant considerations.
However, according to the analysis, the main driver of asset price is the extent to which the world decides to use XRP to store wealth. According to the white paper, this will happen after people see a modest increase in price from using the asset.
For example, the pipeline flow model looks at transaction volume, stores of value, supply and demand interaction factors, and the interaction dynamics of competition. It assumes that there will be a “big bang” event caused by the FX trading volume on the XRPL suddenly exploding.
The propositions and projections are controversial
It should be noted that Valhil Capital’s statement should be taken with a grain of salt. Even in the XRP community, founder Jimmy Vallee and his buyback theory are more than controversial.
Several well-known members of the community, such as attorney John E. Deaton and CryptoEri, have distanced themselves from the buyback theory. Deaton made it clear in February this year that he will not accept money from Vallee for his efforts in the Ripple and LBRY cases.
The XRP buyback theory dates back to 2021. According to Vallee, XRP will become the world’s reserve currency when government debt reaches unsustainable levels. He argues that this is only possible if governments buy large amounts of XRP, at a much higher price than it currently does.
At the time of writing, the XRP price was at $0.5209.
Featured image from iStock, chart from TradingView.com