For an internationally focused coin like XRP (XRP 3.00%), the Trump administration's new set of tariff policies represent an obvious threat. Aside from the direct economic implications they entail, tariffs could diminish the need for the coin's unique capabilities.
But where there's risk, there's often also opportunity. So is this cryptocurrency still worth buying right now, or have the conditions shifted too much?
CRYPTO: XRP
Key Data Points
Game out the uncertainties here
Let's hash out the mechanisms by which XRP might be in a bit of trouble as a result of any of Trump's planned tariffs (now on a three-month hold before implementation.)
It goes without saying that tariffs are not being placed on XRP specifically, which might be impossible, and that the coin itself will not see its fees or tokenomics change as a result of any shifts in trade policy. What matters here are the affects of trade policy on the coin's rate of adoption among its target users, as well as its trading volume and the trading volumes of the tokens on its chain. Could tariffs have an impact on those factors? Certainly yes.
Tariffs increase the cost of goods and services because the importing businesses tend to pass the additional expenses on to customers. Per every introductory microeconomics textbook, as the price of a good rises while its supply stays constant, demand for that good must drop. Therefore tariffs are very likely to decrease the demand for imported goods from every country subject to them, which is to say nearly every country on the planet save for Russia, Belarus, and North Korea -- which export little or nothing to the U.S.
With lower demand for trade goods, less money needs to change hands across international borders to pay for those goods. With lower payments volume, financial institutions will incur lower currency exchange and money transfer fees. If these fees shrink, that eases a big pain point for the financial institutions responsible for handling trade payment flows, though it's a cold comfort as their business slows overall.
This scenario probably isn't great for XRP. With the sum of transfer and exchange fees reduced, financial institutions have less pressure to adopt technologies that help them save on those costs, like XRP specifically. Of course, adopting the coin would still help them to lower their expenses beyond what the legacy technologies like SWIFT cost, so some would still want to switch over to XRP.
A larger issue is that the existing volume of transactions on XRP's network might take a hit as well.
For instance, the stablecoins hosted on its chain are already being used to process international payments denominated in dollars. Each stablecoin held in a financial institution's digital wallet is a representation of real fiat currency value that's stored on XRP's chain. With less pressure to accumulate stablecoins to process payments, there won't be as many assets flowing into the chain, and some might even flow out. That directly threatens the price of XRP because the coin's value is influenced by the total amount of assets in the network.
The decision is easier if you're in it for the long haul
Another risk to XRP's value in the near term is that if the global economy goes into recession, it could usher in a cryptocurrency bear market. That would severely dent the price under the best conditions. But it isn't guaranteed to happen, and, even if it does, it doesn't necessarily detract from the investment thesis for buying and holding the coin.
It's not possible to predict right now how long the tariffs will last, or if they will even be imposed. With that said, XRP is still going to be a useful tool for banks and currency exchange businesses because it helps them lower their expenses and make monetary transfers faster. Investors should take care to note that the coin can fulfill that role for those users whether its price is $0.01 or $10. The path for the coin's price to increase from any given point depends largely on whether the target customers are looking to use more of it in the future than they are today.
And in the long term, the key drivers of adoption for XRP are going to exist with or without tariffs, a bear market, or a recession. Keep in mind that those phenomena could make its price fall quite a bit in the short term, which will likely shake your conviction if you make a big lump sum purchase soon.
Is XRP still worth buying right now? If you're highly tolerant to risk, patient, and willing to invest in small amounts over time, yes, it's still worth buying. For everyone else, it makes more sense to wait until there's a bit less uncertainty in the air because taking a leap of faith and buying a lot of it is probably going to be an emotional rollercoaster, at least in the near term.
