Ripple CTO Warns of Early Supply Shortages for RLUSD Stablecoin, Urges Caution Against FOMO

David Schwartz, Ripple’s Chief Technology Officer, has cautioned investors to avoid falling for the “Fear of Missing Out” (FOMO) as the launch of Ripple’s US Dollar-pegged stablecoin, RLUSD, approaches. While he expects potential supply shortages in the early days following the stablecoin’s debut, Schwartz stressed that the price will likely stabilize close to its intended $1 peg once supply levels normalize.

In a December 15 post on X (formerly Twitter), Schwartz explained that RLUSD, despite being designed to maintain a 1:1 parity with the US dollar, could experience significant volatility at launch. The CTO pointed out that some early pre-market bids for the token were inflating its value artificially, noting a bid of approximately 511 XRP (roughly $1,244 at current rates) for just a tiny fraction of an RLUSD token.

“There’s someone willing to pay $1,200/RLUSD for a tiny fraction of one RLUSD,” Schwartz remarked. While this may appear to signal an imminent surge in demand, he assured the community that such inflated prices wouldn’t last long. “The price will come back to very close to $1 as soon as supply stabilizes. If it doesn’t, something is very seriously wrong,” he added. Schwartz emphasized that RLUSD, like all stablecoins, is not a vehicle for speculation, urging potential investors not to view it as a way to get rich quickly.

RLUSD Stablecoin Launch Details

Ripple’s RLUSD stablecoin recently received its final approval from the New York Department of Financial Services, as announced by CEO Brad Garlinghouse on December 11. With the official launch now on the horizon, Ripple plans to use RLUSD alongside XRP in its cross-border payments network, aiming to enhance the liquidity and efficiency of global transactions.

The RLUSD stablecoin has been developed to complement XRP, with the two assets paired to help stabilize RLUSD’s price and ensure it maintains its $1 peg. Ripple sees RLUSD as an integral part of its payments infrastructure, catering primarily to large institutional players. Ripple President Monica Long previously stated that RLUSD was built to be “complementary and additive” to XRP, leveraging XRP’s wide availability on exchanges to provide liquidity and strengthen the stablecoin's price stability.

Caution Advised as Supply Normalizes

Ripple’s latest development signals its continued push into the stablecoin market, but Schwartz's warning highlights the inherent risks during its initial rollout. While early signs suggest interest from large players, potential price fluctuations in the first days could attract speculative behavior. As Ripple prepares for RLUSD’s official launch, investors are advised to exercise caution and resist the urge to get swept up in the hype surrounding its debut.

Schwartz's message serves as a timely reminder that stablecoins are designed to remain stable and that significant price volatility at launch is not indicative of long-term trends. Once supply levels stabilize, the price of RLUSD is expected to align closely with its 1:1 peg to the US dollar, with Ripple’s broader plans to integrate it into their cross-border payment solutions further strengthening its utility and long-term viability.