The Ripple (XRP 0.90%) cryptocurrency rode a roller coaster in 2023. Starting the year at $0.35 per token, the international payment system's operating coin rose as high as $0.82 before dropping back down to $0.62. These sharp trend changes made the S&P 500 (^GSPC +1.46%) and Nasdaq Composite (^IXIC +2.02%) indices look sleepy by comparison, even though the market trackers delivered gains of historic scale last year:
Digital asset investors see the latest crypto winter thawing out, and Ripple has several unique catalysts waiting in the wings. Is the token more properly known as XRP setting up for a rocket launch?
Let's have a look.
The elephant in the courtroom
Above all else, Ripple investors keep a close eye on the lawsuit launched by the Securities and Exchange Commission (SEC) three years ago. The suit halted XRP trading on American crypto brokerage services for two years, and the popular Robinhood (HOOD +2.73%) platform still won't let you buy or sell Ripple. The risk of court-ordered fallout from potentially improper trading of digital assets is still too large.
The lawsuit took a significant step forward last summer, when District Judge Analisa Torres in the Southern District of New York dismissed most of the SEC's complaints. It wasn't a complete victory for XRP and Ripple Labs, and the charge of illegal trading of unregistered securities continues, but only in terms of institutional investors.
The final verdict of the SEC lawsuit will be game-changing. Ripple Labs set out to defend its conduct to the very end, avoiding settlements in order to set a legal precedent through a proper trial. The parties have document-filing deadlines to meet over the next few months, leading up to a jury trial in the summer or fall of 2024.
That could be the end of Ripple's courtroom drama, or the case might drag out with appeals over several more years. Either way, the token's price will surely react strongly to the progress (or lack thereof) of interim rulings. So a favorable outcome in that New York courtroom could indeed drive XRP's price higher in 2024 -- while a harsher verdict would have the opposite effect.
The business behind Ripple's digital coin
Mind you, the Ripple payment system runs a successful business outside American borders. The crypto network's trading volume actually spiked in the fall of 2020, several months after the court-inspired shutdown of U.S. trading. The volume stayed sky-high for a full year, indicating strong use of the quick-and-cheap payment system without access to the world's largest financial market.
With or without an American market with reasonable regulations, Ripple should gain value over time from its international footprint. On top of the border-crossing payments solution, the cryptocurrency also serves as a solid platform for central bank digital currencies (CBDCs) and other crypto-based financial systems. Ripple has explored the CBDC opportunity since 2016 in tandem with mega-banks such as Bank of America (BAC +0.91%), Royal Bank of Canada (RY +1.76%), and Banco Santander (SAN +4.38%).
The development of standards and technologies to support Ripple-based CBDCs may have slowed down during the American lawsuit spectacle, but it never stopped. Recent success stories include a Ripple-powered stablecoin linked to the U.S. dollar in the tiny island nation of Palau. In the slightly larger but much richer market of Singapore, Ripple is now fully licensed to run digital payment services -- a step toward launching a full-on CDBC.
These projects should catch a second breath as cryptocurrencies become more mainstream. If and when partners like Bank of America and Santander announce fresh progress in their Ripple Labs collaborations, those press releases could prompt a bullish market response.
CRYPTO: XRP
Key Data Points
XRP's gains should come, but maybe not right away
So Ripple's business prospects keep growing, no matter what happens to the SEC lawsuit. XRP is the sixth most valuable cryptocurrency today, and for good reason -- you're looking at a respectable digital solution to more than one problem in real-world financial services. Looking past the daily price swings, cryptocurrencies create true coinholder value via successful answers to financial questions.
I'm not saying that Ripple is poised to pop in January, or that the token most certainly will rise later in 2024. However, it does seem poised for long-term success. If the XRP price doesn't soar in 2024, you might want to pick up some tokens on the cheap and settle down for stronger pricing in the years ahead.
I don't mind waiting for a market-beating gain until 2025 or 2030 -- patience is a long-term investor's best friend, after all. In the meantime, XRP may pop or flop from time to time, giving investors the opportunity to cash in some gains or double down on the future opportunity.
