Is it Worthy to Purchase XRP as Its Value Remains Below $4?
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The digital currency XRP (XRP 3.92%) was a less-than-impressive investment for quite some time. From the beginning of 2022 to the end of 2023, XRP followed trendsetter Bitcoin (BTC 3.57%) lower and then leveled off, underperforming the S&P 500 (^GSPC 0.53%) stock market index during the inflation panic. XRP continued its struggle in 2024 while Bitcoin and the stock market surged higher.
However, the currency that was once known as Ripple has found new life. The coin's price has more than quintupled from November 11, 2024, to January 21, 2025. I thought XRP looked promising when it was worth less than $0.60 per coin, five months ago. I still considered it a good buy just below the $3 price point in mid-December of the previous year. Has XRP reached its peak in January, or does this cryptocurrency have more fuel to burn?
Let's explore the reasons for XRP's recent surge.
Factors boosting XRP's price
XRP's price isn't soaring in a vacuum. The digital currency has several value-enhancing factors at play.
- A cryptocurrency-friendly administration has promised support for digital currencies, including a pro-crypto name for the head of the Securities and Exchange Commission. As XRP's third-largest cryptocurrency by market cap, and with an ongoing SEC lawsuit over four years old, this could be a significant boon for the coin's investors.
- Ripple Labs has introduced an XRP-backed stablecoin called Ripple USD (RLUSD 0.00%). This digital cash alternative makes the RippleNet international payment system more stable and user-friendly, especially for large organizations sending large payments across borders.
- The Ripple USD stablecoin can be used to tokenize various real-world assets, such as digital dollars and investment securities. It can also be transferred to international buyers, expanding its use case.
- The stablecoin's Ether compatibility opens up a whole new market for these two popular cryptocurrencies. It allows XRP to tap into the decentralized finance market in a new way.
- Exchange-traded funds (ETFs) tracking the price of Bitcoin and Ethereum were introduced last year. Additional spot-price crypto ETFs could be launched before 2025, with XRP near the top of the wishlist. These funds could attract new investor classes and drive up crypto prices, including XRP. Several financial management firms have filed their paperwork for XRP-based ETFs with the SEC.
- Active XRP accounts and XRP transactions saw a significant increase in December. The thriving RippleNet payment system underpins an investment thesis based on real-world usage for the digital asset XRP was always intended for.
None of these XRP-boosting developments came as a surprise to long-term XRP observers. Still, installing a crypto-friendly regime is a world away from hoping for one. It makes sense to remain cautious about XRP's long-term prospects until it rolls out supporting features like the Ripple USD stablecoin and tokenized contract transfers.
Can XRP keep climbing the crypto mountain?
I can't guarantee that XRP's price chart will continue its upward trajectory all year long. However, the crypto market's 15-year history suggests that leading coins should generally perform well in 2025, and XRP has several tools to drive its price higher.
I'm not entirely convinced that XRP deserves to be one of the top three crypto names in the long term. Turbulence may lie ahead, and XRP could experience a painful price correction at some point. This high-flying coin isn't for the faint of heart.
XRP ranks among my largest crypto holdings, acquired after the recent surge, but I haven't purchased any more XRP since December 2020. I'm content holding these coins for the long term, and you may want to consider starting an XRP position if you haven't already.
However, XRP isn't an automatic top pick right now. Rapidly increasing coin prices can lead to hefty price cuts if one or more of the ongoing growth catalysts fail to pan out as expected. I have more promising ideas for new crypto investments these days.
[1]: https://decrypt.co/78438/ripple-xrp- price-surge-us-treasury-backed-stablecoin-partnership
In light of the promising factors such as a cryptocurrency-friendly administration, the introduction of Ripple USD stablecoin, and potential ETFs, one might consider investing more money in XRP to capitalize on its potential growth. However, it's important to remain cautious given the volatile nature of the cryptocurrency market and potential price corrections.
