The cryptocurrency commonly known as Ripple (XRP 0.63%) is down by more than 10% over the last week. Trading at $0.58 per token, XRP also stands far below the short-lived peaks near $2 in 2021 and $3 in 2018. So Ripple's crypto winter is still in full force, despite positive developments in the cryptocurrency's long-running courtroom drama and a general thawing of the broader crypto market's chill.

If Ripple is ready to break loose, this could be a great time to pick up some tokens on the cheap. Or, if the border-crossing payments vehicle is headed for even darker days, maybe it's best to stay away.

So, which thesis holds more water? Let's have a look.

A reflective android with a finger on its chin.

Image source: Getty Images.

Signs of a brighter future for Ripple

First and foremost, XRP investors are looking for a favorable outcome in the lawsuit filed by the US Securities and Exchange Commission (SEC) nearly three years ago.

The SEC argues that Ripple Labs and its executives raised $1.3 billion in an unregistered offering of securities. This tactic suggests that XRP -- the crypto token at the heart of the larger payments network called Ripple -- should be treated like a stock or a bond, with all the safeguards and requirements that come with that classification.

The case is developing in Ripple's favor these days. First, Judge Analisa Torres ruled that selling XRP tokens on a public crypto exchange did not qualify as an offering of securities, and more akin to trading foreign currencies. This verdict, assuming it holds up to reviews and appeals, could set a precedent that puts many cryptocurrencies entirely out of the SEC's jurisdiction. In particular, a lighter regulatory hand would be great news for the Ripple network and XRP. That's why XRP prices rose sharply (but temporarily) on the news.

So the lawsuit is still relevant and potentially game-changing, but it's not the whole story.

The crypto market is dreaming of widespread support from institutional investors. If traditional banks and investment firms pump billions or trillions of dollars into blockchain assets over the next few years, most of the larger coins should skyrocket. And XRP is indeed one of those market leaders, with the fith-largest total market value of all digital coins.

So it's hard to ignore analysts from old-school megabank Wells Fargo (WFC 0.23%) musing that Ripple's token could be worth more than $500 in a next-generation ecosystem for global payments. Shannon Thorpe, a business support manager for the bank, did exactly that in September, citing projections by Ripple Labs.

Now, Thorpe is neither a financial analyst nor an official spokesperson for Wells Fargo. Still, I find it interesting when banking insiders of any description see upside in the crypto sector. And the core argument of massive value emerging from a faster, cheaper, and more efficient way to handle international money transfers? I can't argue with that idea.

The dark side of the Ripple coin

Things can also go wrong for Ripple Labs, its payment network, and the XRP token. For example:

  • The lawsuit could still take an SEC-friendly turn, either in the still-ongoing proceedings or the appeals process.
  • Other blockchain solutions might steal Ripple's crown as the leading facilitator of international payments. Candidates include heavyweights such as Solana (SOL 1.00%) and Ethereum (ETH 0.92%), whose smart contracts can serve many of the security, validation, and cash-conversion functions the Ripple network provides. Plus, it's never too late for a brand new option to enter the ring, perhaps with even better technology and beefier partnerships in the banking world.
  • I'm not saying that the Ripple network is insecure, but what if somebody hacks it and steals digital assets from XRP holders? A large-scale security breach could throw ice-cold water all over Ripple's future business prospects.

Yep, XRP looks promising today

I agree that the potential threats are real, but none of them seem very likely to materialize in the short term.

Judge Torres produced a robust reasoning for her verdict, leaving little room for appeals-court upsets.

Ripple's security is arguably tighter than most cryptocurrencies', since Ripple Labs controls the infrastructure behind it. Any significant hacking attack probably has to come from inside that rather small organization.

And competitors always pose a threat, but Ripple is a firmly established specialist in a highly specific field. Sure, Ethereum is much larger, but that blockchain system also serves a thousand other purposes.

So I think the coast is clear. I can't offer any guarantees, but Ripple's XRP token seems poised for robust returns from the current price level. Ms. Thorpe's suggested target of $500 per token by 2027 sounds unrealistic, but a much smaller gain can still deliver market-stomping gains.

Ergo, you should consider buying a few Ripple tokens while they're cheap.