The inflation-flavored 2022 has been a brutal year for most cryptocurrencies. The Shiba Inu (SHIB +0.59%) meme coin has fallen 88% from last October's all-time highs. The XRP (XRP +0.24%) token, which powers the Ripple network's international payments, is down 65% over the same period. Both digital assets took a deeper cut than the stock market; the S&P 500 index is only down 22% over the same span.
For the market in general, and for some specific cryptocurrencies, this sharp plunge will be remembered as a great time to pick up long-term winners on the cheap. However, the rising tide of the future will not lift every digital vessel. Are XRP and Shiba Inu poised for a highly profitable comeback, or have they already seen their best days?
CRYPTO: XRP
Key Data Points
What's going on with XRP (Ripple)?
Ripple investors need to keep up with two crucial developments.
First, XRP's real value depends on global customers adopting Ripple's blockchain-based international payments system. American banks are not tapping into this platform at the moment, for the reasons discussed below. But that hasn't stopped Ripple from expanding its partnerships in other countries.
Key markets added over the last two months include Brazil, Sweden, France, and Thailand. Most of these launches involved a deeper partnership with a longtime Ripple collaborator, the Spanish mega-bank Banco Santander (SAN +0.45%).
Long story short, Ripple's international payment system is extending its reach as we speak. This development bodes well for rising CRP prices in the long haul.
Second, the Securities and Exchange Commission (SEC) filed a lawsuit against the Ripple Labs company in December 2020. The SEC argues that the XRP token is an investment security and should be subject to the same rules and regulations as stocks, bonds, and mutual funds. As such, the initial issue of XRP tokens broke requirements for the registration of new securities, resulting in $600 million of allegedly illegal funding.
Ripple disagrees, arguing that XRP is a functional tool and not an investment vehicle. Therefore, it should be treated like the U.S. dollar, the euro, and other currencies. Under these rules, there was nothing wrong with the coin's original issuance.
Major cryptocurrency exchanges were quick to shut down XRP trades for American customers and the currency is still effectively off the market in the U.S. The legal wheels turn slowly, but many observers now expect a final ruling in the first half of 2023.
That ruling is a make-or-break moment for Ripple Labs and the XRP token. An SEC-leaning ruling would freeze your existing XRP holdings until further notice, even if the Ripple network turns out to be successful in other markets.
On the other hand, a ruling strongly in favor of Ripple could send the XRP token skyrocketing and also clarify how the government should manage trading and ownership of cryptocurrencies in the long run.
CRYPTO: SHIB
Key Data Points
What's special about Shiba Inu?
Shiba Inu started as a joke, riding the coattails of the older and better-known meme coin, Dogecoin (DOGE +0.84%). But Shiba Inu has evolved into a more serious blockchain system while Dogecoin stuck to its defective guns.
Dogecoin remains a Bitcoin (BTC +1.63%) clone without the original crypto's value-preserving coin cap. Its only redeeming feature is its adorable marketing scheme. Dogecoin is subject to massive inflation and its price should fade to zero in the long run.
By contrast, Shiba Inu is an advanced token based on the Ethereum (ETH +1.93%) blockchain platform. Ethereum's smart contract feature makes Shiba Inu an option for developers in the world of decentralized finance apps. Furthermore, Shiba Inu has a hard cap on the total supply of available tokens, which protects the system against inflation.
Shiba Inu may look like a silly idea, but it actually represents a healthy developer community and doesn't come with the inflationary baggage you'd expect from a true joke.
Final verdict: It's a draw!
In the end, cryptocurrencies will be valued by their utility. While I do appreciate Shiba Inu's fresh take on marketing and community management of a reasonable technology platform, Ripple is years ahead in its quest for real-world usage.
That long-running SEC dispute is the joker in the deck. This precedence-setting case has the power to boost or disrupt Ripple and XRP. I'm no lawyer and I hesitate to offer an opinion on where the chips are going to fall. Therefore, I can't wholeheartedly recommend that you make a large investment in Ripple, either.
So both of these tokens are interesting, but neither one looks like a solid long-term investment right now. There are too many question marks in the air. SEO link: Future of Crypto You should keep your Ripple and Shiba Inu investments modest, at least until the U.S. courts have had their say on the SEC lawsuit.
