Cryptocurrency investors are enjoying a huge bull market right now. Ironically, it's not Bitcoin stealing the show (though the flagship crypto's price has doubled during the past year), but XRP (XRP +0.86%), which has seen its price rise by almost 500%.
XRP is now more than $3.25 per share (as of Aug. 12), leaving investors wondering whether the token is ready to surpass $4 for the first time.
The Trump administration's pro-crypto stance and policies have been game-changers for XRP and the broader sector, and XRP specifically has another exciting catalyst on the horizon.
Here is what you need to know, and whether XRP is a buy for less than $4.
Image source: Getty Images.
XRP and other cryptocurrencies have a lot of momentum right now
There are many positive developments in the cryptocurrency landscape.
Donald Trump campaigned on supporting cryptocurrencies, and his administration has largely followed through since assuming office in January. Trump announced an executive order to establish a better regulatory framework for the crypto industry, as well as strategic reserves for Bitcoin and other digital assets.
XRP's developer, Ripple, had been engaged in a lawsuit with the Securities and Exchange Commission (SEC) since late 2020 over the company's sale of XRP tokens to exchanges and institutional investors. A judge issued a mixed ruling in the summer of 2023, but the two sides had appealed and cross-appealed the verdict. Both parties have moved to drop their appeals, ending the litigation.
Ripple developed the XRP ledger for cross-border transactions. XRP is the native token for the XRP ledger. With the litigation overhang dissipating, it's more likely that companies, governments, and other institutions, for which Ripple developed XRP and the XRP Ledger, may embrace them for their intended purpose.
Trump also just signed an executive order to open up U.S. 401(k) retirement plans to alternative assets, which would include cryptocurrencies. This likely won't have an immediate effect on demand. Still, it underscores cryptocurrency's progress into the mainstream investing scene, and may increase buying activity in XRP and broader digital assets over the long term.
CRYPTO: XRP
Key Data Points
A new catalyst on the horizon for XRP
Cryptocurrency prices rely on buyer demand, since they have little or no underlying tangible value. The two largest cryptocurrencies, Bitcoin and Ethereum, have spot exchange-traded funds (ETFs) that accumulate the coins. For instance, the Grayscale Bitcoin Trust ETF holds more than 180,000 bitcoins alone, so you can see how these institutional funds can have a lot of buying power.
Perhaps it's only natural, since XRP is the third-largest cryptocurrency, but multiple institutions have filed applications to launch spot ETFs that hold XRP. There are at least nine applications filed with the SEC to launch spot XRP ETFs, and that doesn't include some of the financial sector's most prominent players, like BlackRock. The SEC could issue a decision on some of these ETFs as early as this fall.
Should investors buy while XRP is less than $4?
I can see why XRP's price has risen so much lately. The litigation was a storm cloud over XRP that arguably helped prevent it from surpassing its previous highs from years ago. Meanwhile, Bitcoin has continued to surge to new heights amid growing interest in cryptocurrencies. With all these positive developments, XRP has made up a bit of ground over the past year.
But as I've written previously, XRP is still a very small player in cross-border transactions, and its long-term future remains highly speculative. Even if XRP's price does breach $4, it, like other cryptocurrencies, has historically been a rollercoaster and may not sustain those highs.
There is nothing wrong with having some exposure to XRP, because it does have a path to increased usage and value over the coming years. As always, approach cryptocurrencies with a lot of caution, and avoid letting them represent too much of your total investments.
