XRP has the potential to reach new record highs in the coming years, presenting an intriguing opportunity for investors willing to tread cautiously in the volatile cryptocurrency market. While investing life savings in cryptocurrencies remains a risky endeavor, particularly due to their considerable price fluctuations compared to traditional assets like stocks, some investors may find promising cryptocurrencies worth exploring with discretionary funds.
To illustrate this point, consider that a $100 investment in XRP, the native cryptocurrency of the XRP Ledger, would have grown from an initial trading price of $0.005 in 2013 to approximately $53,000 today, showcasing substantial price appreciation over the years.
The price of XRP soared primarily due to its foundation by Ripple Labs, known for facilitating blockchain-based money transfers. Launched in 2012, the XRP Ledger was designed as a faster and more cost-effective alternative to the conventional SWIFT transfer system. The entire supply of XRP, capped at 100 billion coins, was minted ahead of its public debut. While Ripple sold off a significant portion of these coins to fund growth, a tiny fee is burned with each transaction, leading to a gradual decrease in total supply.
In 2020, Ripple faced a significant setback when the U.S. Securities and Exchange Commission (SEC) accused the company of selling unlicensed securities, leading to delistings from major crypto exchanges and the loss of key partnerships. XRP’s price plummeted from its all-time high of $3.84 in January 2018 to as low as $0.31 in 2022, impacted heavily by the broader cryptocurrency downturn and interest rate hikes.
However, in 2023, a pivotal ruling by a district judge determined that XRP tokens sold on public exchanges were not securities, while those sold to institutional investors qualified as such. This decision was coupled with a relatively modest fine of $125 million for Ripple, allowing the company to regain footing as major exchanges relisted XRP. The recent approval of the REX-Osprey XRP ETF for trading on the CBOE has also contributed to renewed optimism around the cryptocurrency.
Additionally, the Trump administration identified XRP as part of a strategic digital asset stockpile alongside major cryptocurrencies like Bitcoin and Ethereum, further bolstering its credibility. The favorable market sentiment, along with declining interest rates, has rejuvenated investor interest in XRP.
Despite these positive developments, XRP’s price remains nearly 40% below its all-time high, with its future valuation uncertain. Unlike Bitcoin, which benefits from scarcity, and Ethereum, which thrives due to its developer ecosystem, XRP’s value largely hinges on its utility as a bridge currency for transferring between less liquid assets. For instance, XRP facilitates a faster and cheaper conversion between two thinly traded currencies, significantly reducing costs and time.
Ripple’s CEO, Brad Garlinghouse, has projected that XRP could capture up to 14% of SWIFT’s transaction volume by 2030, which could enhance its appeal as a haven cryptocurrency similar to Bitcoin over time. Although XRP does not support smart contracts natively like Ethereum, potential future compatibility with Ethereum’s network through sidechains could attract more developers and boost usage in decentralized finance (DeFi) applications.
The anticipated approval of new XRP ETFs could attract additional retail and institutional investors, amplifying demand. Ripple’s recent move to apply for a U.S. bank charter further indicates its aspirations to become a comprehensive financial entity, which could elevate XRP’s status.
While a market cap of approximately $145 billion raises questions about replicating its staggering past performance, many believe that with regulatory hurdles now largely overcome and numerous growth opportunities on the horizon, XRP could achieve new highs in the near future. Although still viewed as a speculative investment, a modest stake in XRP might be worth considering for those looking to explore the cryptocurrency landscape.
