- Ripple executive Breanne Madigan recently stated that the firm is addressing a multi-trillion dollar payments market with XRP.
- She also advocated for the Barbell strategy which diversifies an investor’s risk when targeting the cryptocurrency market.
Ripple is addressing a multi-trillion dollar payments market with its digital asset XRP, the company’s head of global institutional markets recently claimed. Breanne Madigan believes that XRP’s utility in this market gives it a driver for value creation.
In an interview with American financial magazine Barron’s, Madigan delved into why XRP will yield great value in the long term, the case for investing in Bitcoin and the investment strategy she believes can bring in the best returns for investors.
– #XRP is solving a real problem
– We are in a super early stage while it’s promising to see huge institutional investors and large fortune 500 companies putting their treasury into cryptos
Breanne Madigan, Ripple
December 3, 2020 pic.twitter.com/PJ5VnH9TyZ
— Steven Bull Diep (@DiepSanh) December 3, 2020
For the newbies, Madigan urged them to keenly study a few individual cryptocurrencies before investing. They should seek to understand the utility of these cryptocurrencies and their core value proposition. In addition, they should analyze the problem these coins are solving and the total addressable market. Ripple’s XRP is a prime example of a cryptocurrency that’s solving a real-world problem, she told the outlet.
For example, in payments because of trapped capital, there’s trillions and trillions of dollars of market opportunity that XRP as a digital asset is solving for. So that’s a huge addressable market. So there you would see a driver for value creation.
Bitcoin is also addressing a huge market of value storage which gold dominates, she went on.
For Bitcoin, look at the market cap of gold and look at the market cap of Bitcoin. There’s still tons of room, but will there be volatility between here and when we see a top for Bitcoin? Absolutely.
BTC’s market cap currently stands at $353 billion, with gold’s over 25x bigger at $9 trillion.
The barbell strategy for cryptocurrencies
The Ripple executive noted the recent flurry of institutional investors’ interest in cryptocurrencies, saying that it’s a good sign for the industry. However, this will not stop the volatility that’s a mainstay in the cryptocurrency markets, she told the outlet.
Madigan joined Ripple in May 2019, leaving her post at Blockchain.com where she led the institutional investors’ division. Before joining the cryptocurrency world, she served as the head of institutional wealth services at Goldman Sachs.
On investing in cryptocurrencies, Madigan advocated for the barbell strategy. This strategy involves investing in very risky assets and some little risk assets, avoiding intermediate-risk assets. Investors should invest half of their money in long-term value, such as in some promising cryptocurrency startups. The other half should go to “three or five crypto assets that you understand the value proposition and the problem they are solving.”
Because ultimately as you figure out that addressable market, you can back into the reasonable valuation. And as I said in my example earlier, taking just a 3% exposure to the asset class should result in at least a 15% outperformance versus a traditionally managed portfolio that’s non-crypto.”