The cryptocurrency market is soaring. It's now valued at close to $2.6 trillion. This is a huge gain from the start of 2023. The bullish sentiment has lifted Bitcoin to near all-time highs.

Not all cryptocurrencies are benefiting as much. Ripple (XRP -0.96%) currently sits 85% below its peak price, which was set in January 2018. But at a market cap of $32 billion, this remains on the radar of digital asset investors hoping for things to turn around.

Is it time to buy XRP with $100 right now with the plan to hold through 2024 and beyond? Here's what investors need to know.

Building a valuable use case

Ripple operates a blockchain network that connects financial institutions around the world. The native token, known as XRP, can be used to send fast and cheap payments across borders. Local currencies can be converted to and from XRP. Ripple claims transactions cost fractions of a penny, and they can be completed in seconds.

That compares very favorably to the traditional process. If someone in the U.S. wanted to send money to someone in the Philippines, for example, there would be numerous intermediaries involved, each taking a cut. Even worse, it would take several days for the recipient to get that cash, only after paying sizable fees.

This shows that Ripple is trying to solve a real problem. And the target market is truly vast. Hundreds of billions of dollars of remittances are sent across borders globally each year, and there was a whopping $150 trillion of money sent between banks in 2022. Even if Ripple only captures a tiny sliver of all this activity, it will have phenomenal upside.

Catching regulators' attention

Ripple might have developed a promising use case, but it has struggled to escape its regulatory headaches. For the past few years, Ripple has been dealing with back-and-forth with the Securities and Exchange Commission (SEC), which first sued Ripple in December 2020, claiming XRP should be regulated as a security.

This is generally viewed as bad news because it would require ongoing reporting of Ripple's financials, which adds greater expenses. It also means that XRP can only be traded on regulated exchanges. In other words, the potential buyers of XRP could be reduced in this scenario.

Last year, the SEC announced that only XRP sales to institutional investors could be viewed as an offering of securities. Sales to individual investors are OK. The issue with this ruling, however, is that institutions control enormous amounts of capital used in cross-border transactions, representing a potentially huge source of demand that could drive up XRP's price.

For now, Ripple is likely to remain in the crosshairs of the SEC. Its legal battles aren't finished yet.

A risky investment

Ripple's payments network creates a compelling use case for cryptocurrencies. But it still faces intense competition from the major financial institutions out there in different countries. Plus, JPMorgan Chase, with something called Onyx, is building a direct rival to Ripple. So there's a ton of risk as it relates to XRP's ultimate adoption.

The fact that XRP faces regulatory scrutiny also adds a tremendous amount of risk to the equation. I believe this factor is why the token remains far off its peak price.

Legal troubles could also be why XRP has fallen 7% this year (as of April 4). This compares unfavorably to the monster 53% gain of Bitcoin and the 54% rise of the overall crypto market. Perhaps investors are slowly losing interest.

It's probably best to pass on XRP right now. The risk is simply too high.