Cryptocurrency XRP (XRP 0.98%) remains mired in a month-long slump that has seen its price fall below the $3 mark. XRP is now down about 25% after hitting a new 52-week high in July. Quite simply, this wasn't supposed to happen.
Some of XRP's sluggishness can be chalked up to general market malaise, as crypto traders wait for market bellwether Bitcoin (BTC 2.78%) to lead the way higher. But there are two important factors that could result in a much longer downtrend for XRP than many previously expected.
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The new spot ETFs could disappoint
The one catalyst that has been talked about since the start of this year is the arrival of new spot crypto exchange-traded funds (ETFs). A number of top investment firms have already filed spot XRP ETF applications with the Securities and Exchange Commission.
The good news here is that it's looking like a slam dunk that at least one of them will be approved by mid-October. Right now, Bloomberg is giving these spot ETFs a 95% chance of approval, while online prediction markets are giving them a 94% chance of approval.
So it's not really a question of whether these ETFs are going to be approved -- it's really a question of just how much demand exists for them. XRP is the world's third-largest cryptocurrency, so there is obviously some demand for it. But how much?
If you look at institutional fund flows into XRP this year, the numbers really aren't that impressive. Through the first eight months of 2025, just $1.25 billion flowed into XRP from institutional investors, according to the latest data from CoinShares.
JPMorgan Chase (JPM 1.21%) earlier predicted that anywhere from $4 billion to $8 billion might flow into XRP once the new ETFs launch. If this total comes in at the lower end of the range, it probably won't move the needle on XRP's price, given that XRP now has a market cap of $180 billion.
Moreover, if you buy into the Efficient Market Hypothesis, which says that all publicly available information is already accounted for in the price of an asset, then it's hard to see how XRP is going to get much of a bounce from a positive SEC decision in October. Traders have been eyeing these ETFs for eight months. Everyone knows they're probably coming. So there is not going to be any type of surprise bounce from the news.
Stablecoins are eroding XRP's value proposition
The primary utility of XRP is serving as a bridge currency for cross-border payments. This is made possible by the XRP Ledger, a distributed blockchain ledger for recording transactions.
As a result, traders can swap a fiat currency (such as the U.S. dollar) into XRP, move it across the blockchain, and then swap XRP into another fiat currency in a different country. As soon as that's done, the XRP can be used again and again. It might sound complex, but this process is much faster and considerably cheaper than with legacy technology.
However, there's now growing consensus that stablecoins are going to eat XRP's lunch. Stablecoins, which are cryptocurrencies pegged 1-to-1 to the U.S. dollar, offer arguably a much more efficient way to transfer value across a blockchain. At the very least, there's not the risk of price volatility, as there is with XRP.
Where does XRP go from here?
Admittedly, XRP has tremendous future upside potential. It's not uncommon to see future price predictions of $4, $5, or even $10.
But that ignores the risk of a price decline over the short term. According to the Polymarket online prediction market, XRP has a 32% chance of falling to $2.50 this year, a 30% chance of falling to $2.40, and a 27% chance of falling all the way to $2. So it's quite possible that XRP continues to drift lower from the $3 level to the $2 level for the next few months before finally recovering sometime in 2026.
At the end of the day, any rise in XRP is likely going to require the participation of Bitcoin, which continues to languish around the $113,000 mark. If Bitcoin is still trading for less than its all-time high of $124,457 by the end of the year, it's almost impossible to see how XRP can go on a rally of its own.
That's just the way the crypto markets work.
