For more than three years, XRP (XRP -1.72%) investors have been patiently waiting for the crypto token to skyrocket in value. For much of that time, XRP has traded below $1. At its current price of just $0.52, XRP is trading more than 85% below its all-time high of $3.84.
But 2024 could be the year that everything changes. At least, that's what the XRP bulls are saying right now. There are three catalysts that could send XRP higher this year. Let's take a closer look at each one.
SEC settlement
The one catalyst that seems most likely is some form of settlement with the Securities and Exchange Commission (SEC) this year in an ongoing lawsuit involving Ripple, the company behind the XRP crypto token. The lawsuit has dragged on since December 2020, which is why there has been no sustained upward action in XRP's price for more than three years. The SEC is adamant that XRP is a security, not a cryptocurrency.
That being said, Ripple did achieve a partial victory against the SEC last July. The court ruled that XRP was not a security when sold to the public via an exchange. That would seem to indicate that XRP is in the clear, and the XRP bulls celebrated wildly after that ruling. In just 24 hours, the price of XRP doubled, to just under $1.
But, remember, this was only a partial victory. The court also ruled that XRP was a security when sold to institutional investors via means other than an exchange. That's confusing, right? XRP is a security when sold to one group of investors, but is not a security when sold to another group of investors.
So you can see why this legal drama continues to drag on. It now looks like there are more events on the court docket through at least April, and that means we might not see a settlement until mid-2024 at best. Ripple says it has already spent more than $200 million defending itself against the SEC. For the foreseeable future, Ripple will continue to hemorrhage cash.
Spot ETF launch
After the SEC approved the first-ever spot exchange-traded fund (ETF) for Bitcoin, crypto investors naturally began to ask, "Which crypto is next?" The most likely target is Ethereum, but there is also an outside chance that XRP could also get a spot ETF of its own.
Image source: Getty Images.
But let's get back to reality on this one. First of all, the SEC has delayed any approval of a new spot Ethereum ETF. Presumably, it wants to see how the spot Bitcoin ETF performs before approving any more spot ETFs. So there won't be any ETF for XRP until there's approval for Ethereum.
But even if the SEC approves a spot Ethereum ETF, there's still very little chance for a spot XRP ETF this year. That's because regulators want to see a futures-based ETF for a crypto before approving a spot ETF. Bitcoin has futures-based ETFs, and Ethereum has futures-based ETFs, so they are in the clear. But XRP does not. XRP first needs a futures-based ETF before it can even think about a spot ETF.
Ripple IPO
Finally, there's the matter of an initial public offering (IPO) for Ripple. This scenario seemed to grow in popularity at the end of last year, largely as a result of all the enthusiasm around the partial victory against the SEC in July. Ripple even hosted a party in New York City for XRP investors, and the hype was off the charts. According to XRP bulls, an IPO for Ripple would send XRP to the moon.
But wait a minute. IPOs require regulatory approval. So do you really think that the SEC is going to approve an IPO for a company that is actively litigating against it in a high-profile lawsuit?
At this year's World Economic Forum in Davos, Ripple CEO Brad Garlinghouse admitted it was unlikely. He said that Ripple was no longer considering an IPO in the U.S. market. And he specifically noted that the SEC was a "very hostile regulator." My takeaway from all this: There's no way we're going to see a Ripple IPO anytime soon.
How high can XRP go?
Based on the above, I think the XRP bulls are painting too rosy a scenario for the token. Most likely, in order for XRP to break through the $1 mark, Ripple would need a full settlement with the SEC in its favor. This would enable Ripple to get back to the hard work of building out the Ripple payment network, which is powered by the XRP crypto token.
But soaring to a new all-time-high seems unlikely to me. A spot ETF is unlikely at best. And an IPO for Ripple, frankly, seems impossible right now. Without those two events, I just don't know if there's enough fuel in the rocket to send the price of XRP to the moon. For that reason, I continue to view XRP as a high-risk, highly speculative investment that is not appropriate for a long-term buy-and-hold portfolio.
