The value of XRP (XRP -0.47%) coin, which came out of Ripple Labs, has skyrocketed over the past three years, surging 324% (as of this writing). XRP's price has risen as more institutions have adopted the Ripple network, which allows for real-time, cross-border payments and currency exchanges. Recent moves by the U.S. government to deregulate cryptocurrencies have also had a significant impact on its price.
But what are the potential catalysts that could drive XRP higher over the next year? I think there are two that could be a boon to the coin's value and one reason why XRP's value might continue to experience volatility.
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Catalyst 1: A new U.S. crypto reserve includes XRP
This catalyst is likely top of mind for XRP investors. President Donald Trump recently signed an executive order establishing a federal cryptocurrency reserve and digital assets stockpile for the first time ever. While the official order talks specifically about Bitcoin as the primary digital asset in the reserve, Trump said on social media that other coins will be in it as well, including XRP.
There's some debate in the crypto world as to whether or not it's a good idea to include smaller and more volatile tokens in the reserve, and the news didn't immediately cause much of a change in XRP's price.
But the impact could be felt further down the road. More financial institutions could begin to see XRP as more of a legitimate cryptocurrency to own if the U.S. government holds it in reserve. There's still a lot we don't know about the details of the digital strategic reserve, but if there's a significant amount of XRP in it, or more gets added to it, it's easy to imagine the coin's value getting a boost.
Catalyst 2: The U.S. government drops its case against Ripple
The Securities and Exchange Commission (SEC) currently has a legal action pending against Ripple Labs over whether or not its coin is a security. The SEC has claimed that Ripple's sales of XRP constituted an unregistered securities offering, which violates federal securities laws. Investors are hoping that with the SEC beginning to take a more open stance toward cryptos, it might eventually drop its charges against Ripple.
This will likely come down to whether or not the acting chair of the SEC, Mark Uyed, wants to drop the case, but so far Uyed hasn't mentioned it. However, there's growing optimism that it could still happen, considering the SEC has backed away from cases against Coinbase Global, Robinhood Markets, and Uniswap recently.
Dropping the charges against XRP could clearly be a catalyst for the digital token and could likely cause more investors who are waiting on the sidelines to buy the crypto.
One reason why XRP could drop
XRP's value can rise and fall very quickly, even on little news. But the coin's volatility could be amped up even higher amid near-daily policy changes from the Trump administration. For example, Trump has threatened extensive tariffs on Mexico and Canada over the past two months but has twice walked back some of the tariffs at the last minute.
That's causing a lot of angst among investors, who are looking for signals as to where they should put their money. I think this uncertainty could damage crypto prices as investors tighten up their speculative buying and focus on safer places to put their money.
That said, XRP could still rise higher over the next year if the crypto regulatory environment continues to soften and if the coin gains further institutional approval after being added to the strategic reserve. Just keep in mind that if you own XRP it's likely to be a wild ride.
