XRP (XRP 1.00%) was supposed to skyrocket in value as soon as Ripple (the company behind the XRP token) resolved its long-running court battle with the SEC. But that simply hasn't happened. The news of a big Ripple win broke on Aug. 7, and since then, the price of XRP has increased from $0.50 to $0.60. (Yawn.) For the year, XRP is still down 2%.
So there are plenty of reasons to be skeptical about XRP's prospects. Add in the fact that the crypto market recently witnessed a mini-crash, and it's easy to see why investors might be scared off speculative risk assets like XRP. That being said, there's a clear path to XRP doubling in price to $1 by 2025, and I think that will be the next big move for Ripple's XRP.
XRP's path to $1
What's particularly perplexing about XRP's recent performance is that it doubled in value to the $1 mark last summer on similar news of a big legal win. Last July, the judge in the SEC court case ruled that XRP was a security when sold to institutional investors, but not a security when sold to retail investors. That might sound confusing, but the market took it as an unambiguous signal that Ripple was eventually going to triumph over the SEC.
Image source: Getty Images.
However, this long-running crypto courtroom drama is filled with twists and turns, and it's not clear if the SEC is going to appeal the most recent court decision. If it does, then it could mean more protracted legal wrangling and more regulatory uncertainty. Add in the fact that the court fined Ripple $125 million in civil penalties, and it's easy to see why the price of XRP hasn't soared as expected.
How high can XRP go?
If you think that all of its legal and regulatory headaches are behind it, XRP hitting a price of $1 seems to be a no-brainer. But can Ripple skyrocket from there? After all, the all-time high for XRP is just $3.84, and that happened nearly seven years ago. For the past three years, XRP has struggled mightily.
CRYPTO: XRP
Key Data Points
Of course, you can come up with all kinds of reasons why XRP has been such a market underachiever. The SEC court case, of course, is at the top of the list. But when will investors tire of all these excuses? At the end of the day, XRP is the only Top 10 crypto (as ranked by market cap) that is down for the year. By way of comparison, Bitcoin (BTC 0.26%), is up 44% for the year.
I can envision some scenarios in which XRP soars past $1 to hit a new all-time high. One scenario involves the launch of new spot ETFs for XRP. And, indeed, there has been speculation that XRP could be next in line after Bitcoin and Ethereum (ETH 0.64%) to get a spot ETF product. Another scenario involves a potential IPO for Ripple, in which case the price of XRP could go parabolic.
Don't forget: Ripple is a real company with a real financial product (a cross-border payment system powered by XRP), so clearing the deck of all legal obstacles means that Ripple can go back to business as usual. Ripple already has extensive relationships within the banking and financial community, and Ripple CEO Brad Garlinghouse is a regular guest at high-profile events, such as the World Economic Forum in Davos, Switzerland.
Due to the SEC court case, Ripple has been forced to put its U.S. expansion plans on hold. So these could finally be ready to move forward in 2025. As proof of this, Ripple recently announced testing of a new stablecoin pegged to the U.S. dollar.
Is XRP a long-term buy?
While I'm convinced that XRP can double in value over the short term, I'm much less optimistic about its long-term prospects. In a way, that's really a shame. In a perfect world, patient long-term investors who held on to their XRP during the really lean years should be handsomely rewarded. But this is Wall Street, not Hollywood, and the long-term outlook for XRP remains uncertain at best.
If you are already holding XRP, then it makes sense to hold on to it even longer. It could be your winning crypto lottery ticket. But, if you're a first-time crypto investor, you're probably better off just buying Bitcoin, which continues to outperform the market and is also projected to double in value by the end of 2025. Better yet, if you invest in Bitcoin, you won't have to worry about the twists and turns of XRP's long-running courtroom drama.
