The same logarithmic regression used for the Bitcoin rainbow chart, applied to XRP. It is included because people ask for it — and because what it gets wrong is more instructive than what it gets right.
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Read this one with more scepticism than the Bitcoin version. The power-law model was fitted to and popularised for Bitcoin. Applying it to XRP is an extrapolation of a technique, not an established result, and several features of XRP’s history are exactly the kind a smooth trend line cannot represent.
This is general information, not financial advice. BizziKit is not licensed to provide financial product advice and nothing on this page is a recommendation to buy, sell or hold anything. The band names shown on the chart — including “buy” and “sell” — are the conventional labels of the original model, reproduced so the chart is recognisable. They are not our view and should not be read as a signal.
The model is fitted to past prices. It has no predictive power, no underlying mechanism, and its band boundaries are chosen by hand rather than derived from the data. Crypto assets are volatile and you can lose the entire amount. If you are making a decision with money, seek advice from someone licensed to give it.
The regression will produce a line for any series you hand it. Whether that line means anything is a separate question, and for XRP there are specific reasons to doubt it.
A shorter history, most of it in one regime. The fit needs a long series spanning several orders of magnitude to say anything. XRP has less history than Bitcoin and a smaller share of it in the very early, very low-priced period that gives the Bitcoin fit its leverage.
Discrete legal events. A large part of XRP’s price history is punctuated by litigation and regulatory developments, which move price in steps rather than along a trend. A smooth curve fitted through step changes describes neither the steps nor the trend particularly well — it splits the difference and misrepresents both.
A different supply structure. The argument people make for a Bitcoin power law, whatever its merits, leans on a fixed and mechanically decreasing issuance schedule. XRP’s supply was pre-created and is released differently. Whatever explanatory story you attach to the Bitcoin fit, it does not transfer.
It may still be high, and that is the trap.
As on the Bitcoin chart, R² here is computed on log price against log time, which flatters any generally-rising series. A respectable-looking number is compatible with a model that describes the actual behaviour badly — including one that misses every event that actually moved the price.
If you compare the two charts, the more informative comparison is not the R² values but the residuals: how far and for how long price departs from the line. Persistent, large departures are the model telling you it is not capturing what drives the series.
Two reasons.
The first is that people look for it, find versions elsewhere with no caveats attached, and take the bands at face value. A version that shows the same chart and explains its limits is more useful than pretending the demand does not exist.
The second is that comparing the two makes the underlying point better than either does alone. Run the same procedure on two assets and you can see that the technique will always produce a confident-looking line with tidy coloured bands, regardless of whether the underlying series has any business being modelled that way. That is worth seeing once.
This chart is denominated in US dollars, because that is how the underlying price data is published and how the model is conventionally drawn.
If you hold XRP in Australia, the number that matters to you is the AUD one, and the gap between them is not noise. The exchange rate moves independently of the asset, so an AUD holder can experience a gain on a day the USD price fell, or the reverse. Any USD-denominated chart is describing something adjacent to your actual position rather than your position.
It also matters for tax. Australian record-keeping obligations for digital assets work in Australian dollars, so a USD chart is not a substitute for records. Check your own position with the ATO or an accountant.
Does the power law model work for XRP?
Considerably less well than for Bitcoin. It was fitted to and popularised for Bitcoin, and XRP has a shorter history, a different supply structure, and large price moves driven by discrete legal events that a smooth trend cannot represent.
Why does the chart still show a good fit?
Because R² is computed on log price against log time, which flatters any generally-rising series. A high value is compatible with a model that misses everything that actually moved the price.
Is this chart in Australian dollars?
No, it is in US dollars, because that is how the price data is published. For an Australian holder the AUD figure differs, and the exchange rate moves independently of the asset.
Can I use this for my tax records?
No. Australian record-keeping for digital assets works in Australian dollars and requires transaction-level records. Check your obligations with the ATO or an accountant.