XRP (XRP 1.37%) has hit a rough patch lately. The price dipped by 8% in August, continuing its trend of up-and-down performance this year. Its recent returns are especially disappointing when you consider that last month, the Securities and Exchange Commission (SEC) settled the lawsuit it had been pursuing against XRP-issuer Ripple since 2020.
But it's not all bad news. Last week, Gemini, one of the major cryptocurrency exchanges, announced the release of a special XRP edition of its Gemini credit card through a collaboration with Ripple. Could this provide a tailwind for XRP during the rest of the year?
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This XRP credit card doesn't move the needle
The XRP edition of the Gemini credit card is a crypto rewards card. Cardholders earn a percentage back on every purchase, with the rate ranging from 1% to 4%, depending on the type of purchase. For example, dining purchases earn 3%, so spending $100 at a restaurant would earn the cardholder $3 worth of XRP. If you've used a cash back card, it's the same idea, except that the rewards are immediately converted to cryptocurrency.
The problem is that you could already earn XRP rewards with the original Gemini credit card, which has been around since 2022. That card lets you choose from a list of more than 50 coins to collect your cash back in, including Bitcoin, Ethereum, and XRP.
There aren't any new features associated with the XRP edition. It's simply a Gemini credit card with a different design and the XRP logo in the corner. In video game terms, it's a palette swap -- the same functions (or in this case, card benefits) with a different color palette.
It's still good publicity for XRP. In the press release, Gemini highlighted that card users who earned XRP rewards and held them for at least one year saw their rewards grow by 453% (as of July 27). The release of the XRP edition of the card could lead to more people deciding to pick that crypto for their rewards.
However, this probably won't do much for XRP's value. Its price dipped the day that Gemini announced the card. And with the market cap of XRP at about $168 billion (as of Sept. 2), cardholders would need to earn a significant amount of rewards to have an appreciable impact on XRP's price.
More important news is coming in October
Although the Ripple-Gemini credit card collaboration didn't affect XRP's price much, there's a decision on the horizon that almost certainly will. Next month, the SEC will rule on several fund managers' applications to introduce spot XRP exchange-traded funds (ETFs).
XRP could potentially become the third cryptocurrency to receive ETF approval; Bitcoin and Ethereum ETFs were approved last year. Both cryptocurrencies have seen sizable institutional investments since then, with Bitcoin ETFs recording total inflows of $54.2 billion and Ethereum ETFs recording inflows of $13.5 billion.
The SEC's decision won't be a make-or-break moment for XRP, but it will likely play a big role in how the cryptocurrency performs to close out the year. An approval could be the catalyst that drives XRP to a new all-time high. A denial would probably mean investors need to brace for another dip.
Institutional adoption is key for XRP
The primary purpose of Ripple and XRP is to facilitate cross-border payments. Financial institutions can use the RippleNet payment system for international money transfers, and if they need liquidity, they can use the system's on-demand liquidity (ODL) service, which uses XRP as a bridge currency. RippleNet essentially provides an alternative to the SWIFT network, the traditional platform for international money transfers.
As such, the growth of XRP is going to depend in large part on Ripple's banking partnerships. It has done well in this regard so far, establishing partnerships with a number of financial institutions, including Bank of America (BAC -0.39%), Banco Santander (SAN 0.05%), and American Express (AXP -1.72%). Among Ripple's partners, 40% use XRP for ODL transactions.
In that context, it makes sense that the debut of an XRP edition of the Gemini credit card wasn't a big deal for the market. A shiny new credit card may be nice for enthusiasts, but it doesn't alter the crypto's long-term outlook. What matters most is that Ripple can continue to add partners, and particularly partners who are willing to use XRP.
