Long-term investors in XRP (XRP 2.42%), sometimes called Ripple after the company that developed it, have endured stomach-churning volatility. Cryptocurrency prices are prone to large swings to begin with, and a lawsuit between XRP's developer and federal regulators has clouded the token's prospect since late 2020.
Still, those who have held on to it have done well: XRP's price has risen roughly15,000% during its lifetime, including more than 300% since the election. The Trump administration has taken a more supportive stance toward cryptocurrencies, which has bolstered sentiment for XRP and other tokens.
Today, it is the world's fourth-largest cryptocurrency by market cap. Can XRP (Ripple) make you a millionaire based on its recent price, or is this token running out of steam?
Here is what you need to know.
Where XRP stands in a fast-changing regulatory landscape
On the one hand, XRP's performance is impressive in the light of a nagging lawsuit by the Securities and Exchange Commission (SEC), which sued Ripple on the allegation that XRP is a security and that Ripple's sale of the token was an unregistered securities offering. Ripple sold it to financial institutions and individual investors via cryptocurrency exchanges.
In July 2023, the judge in the case essentially ruled that XRP was a security when sold to institutions but not when sold to individuals on exchanges. The SEC appealed the ruling, which was seen as a partial win for Ripple, and that is where things stand now.
CRYPTO: XRP
Key Data Points
However, new government leadership, such as the Treasury secretary and head of the SEC, support cryptocurrencies. President Donald Trump has backed that up with a recent executive order to establish strategic digital asset reserves, one dedicated to Bitcoin and another for other cryptocurrencies.
Regulators have begun closing out litigation against some businesses that deal in cryptocurrencies, including cases against Robinhood, Coinbase, Uniswap, and Gemini. Although Ripple's case still stands, it's encouraging that regulators are easing their stance against the industry.
This will ultimately drive XRP's value
If the lawsuit against Ripple is resolved, investors could fully appreciate XRP's potential. The extent of that potential will boil down to the demand for XRP from real-world use.
XRP's purpose is to facilitate cross-border transactions and money transfers. The world's banking system currently depends on the Society for Worldwide Interbank Financial Telecommunication (SWIFT) to transfer, verify, and settle funds sent between countries, but it's cumbersome, slow, and costly.
Using the Ripple blockchain, funds can be converted from one currency to XRP, then from XRP to another currency at the other end of the transaction in just seconds.
Currently, some institutions use XRP for transactions, while some use Ripple's blockchain but not the XRP token itself. That could change once there's more certainty regarding Ripple's regulatory standing. Meanwhile, its blockchain is receiving technology upgrades that could further strengthen the case for using XRP.
Can XRP make you a millionaire?
Given XRP's current $122 billion market cap, it seems unlikely the cryptocurrency will make investors rich overnight. Repeating its lifetime returns would balloon its cumulative market value to trillions of dollars. However, I think there is still quite a bit of upside potential if it establishes itself as a key contributor in an increasingly digital economy during the coming years.
Investors should monitor Ripple's lawsuit for signs of a resolution. After that, it is up to financial institutions to increase the adoption of XRP for international payments. The crypto could be a winning investment if this plays out, even at these prices.
That said, it could be a wild ride. There are many moving parts -- in government, across the cryptocurrency space, and within Ripple's lawsuit. On top of that, cryptocurrency prices have historically gone through boom-and-bust cycles.
If you invest in XRP, mitigate the risks by diversifying your portfolio, buying it slowly and steadily, and anticipating price volatility in both directions.
