For more than a century, no asset class has held a candle to the average annual return delivered by stocks. But when the lens is narrowed to the last decade, cryptocurrencies have left Wall Street's benchmark index, the S&P 500 (^GSPC +0.69%), in their dust.
Although the world's largest digital currency, Bitcoin, has led the charge higher, some of the most popular altcoins have actually performed better over the trailing year. This includes the Ripple payment network's bridge currency, XRP (XRP 0.50%), which has rallied 34% over the trailing year (as of the early evening on Nov. 23), while Bitcoin has retraced by 14% over the same time frame.
Digital currency investors are always on the lookout for the next big thing in the cryptocurrency arena, with many latching onto high-profile blockchain and payment projects. While XRP hasn't been short of catalysts in 2025, several headwinds suggest it'll drop to $1 next year.
Image source: Getty Images.
XRP has been on fire, and it's not hard to understand why
XRP's marked outperformance over the trailing year, relative to Bitcoin, boils down to five factors.
Arguably, the most important boost for XRP came in November, when President Donald Trump was elected to his second term. Compared to Democratic Party presidential nominee Kamala Harris, Trump was viewed as the more favorable candidate toward crypto. Bitcoin and most altcoins rallied following the president's November victory.
The second catalyst, which builds on the previous point, is the long-awaited resolution to litigation between the U.S. government and Ripple. Both parties agreed to drop their appeals following a 2023 split ruling that found some sales of XRP to institutional investors violated securities laws, but sales of XRP on public exchanges did not. The removal of this legal overhang ends years of uncertainty for XRP.
CRYPTO: XRP
Key Data Points
The rise of XRP has also been fueled by the approval of spot XRP exchange-traded funds (ETFs). These are ETFs that hold XRP tokens, providing investors with an easy way to gain exposure to and closely mirror the performance of the bridge currency of Ripple's payment network.
The fourth factor pushing XRP higher in 2025 is the growing utility of RippleNet, Ripple's payment network. More than 300 financial institutions around the globe are estimated to be using RippleNet, with some of these institutions relying on XRP as a bridge currency for cross-border transactions. The XRP Ledger can validate and settle transactions in roughly three to five seconds, with the cost of each transaction coming in at just fractions of a penny.
Lastly, Wall Street analysts have begun chiming in on popular altcoins currently living in Bitcoin's shadow. Analyst Geoff Kendrick of Standard Chartered set a price target for XRP of $12.50 by 2028. If Kendrick's assessment proves accurate, XRP would offer more than 500% upside over the next three years, as of this writing.
Image source: Getty Images.
XRP can lose 50% of its value in 2026
With a better understanding of what's been fueling XRP's recent outperformance, let's dig into the various headwinds that could stunt its rally and send this hyped digital currency back to $1 in 2026.
The leading factor that suggests XRP will struggle in the new year is its lack of catalysts. The end of litigation and the approval of spot XRP ETFs were both highly anticipated events this year. But with significant cash flows into spot XRP ETFs now in the rearview mirror, and no major announcements or events on the horizon, the typically emotion-driven XRP may struggle to gain traction.
Another issue for XRP is the realization that its adoption rate isn't as impressive as advertised. While RippleNet being used by more than 300 global financial institutions is nothing to sneeze at, more than 11,000 institutions rely on the Society for Worldwide Interbank Financial Telecommunication (better known as SWIFT) for their cross-border payments. It's going to be incredibly difficult for XRP to supplant SWIFT, and it may not make much, if any, headway in 2026.
Furthermore, it's imperative to note that RippleNet doesn't require the use of XRP to facilitate payments. While it's a commonly used bridge currency, it's not being used universally in all countries. Purchases of XRP by financial institutions are likely necessary for XRP to continue its uptrend.
I'd argue that investors are also wrongly conflating Ripple's future success with that of XRP. Ideally, investors would have the opportunity to invest directly in Ripple, gaining exposure to its payment network. But XRP's success doesn't correlate with that of Ripple. The latter can generate profits from RippleNet, while the former (XRP) lacks stand-alone value.
CRYPTO: SOL
Key Data Points
It's not even a certainty that XRP is the best solution for cross-border payments. While its average settlement time of three to five seconds is alluring, when compared to wait times of up to one week when making cross-border payments using traditional methods, Solana (SOL 1.34%) can validate and settle payments in an average of 400 milliseconds. Similarly, Stellar's (XLM 1.51%) peer-to-peer payment platform can rival the XRP Ledger in terms of average settlement time.
The final issue for XRP concerns digital currencies being tied to the outlook for equity markets. Although stocks and digital currencies should be two independently trading assets, Bitcoin and altcoins have been moving in lockstep with Wall Street.
In late October, the S&P 500's Shiller Price-to-Earnings Ratio peaked at a multiple of 41.20, which is its second-highest multiple during a continuous bull market when back-tested to 1871. In plain English, the stock market is historically pricey, and that's usually bad news for investors. If the S&P 500 were to dip into a correction or bear market, there's a good likelihood that cryptocurrencies would follow, with altcoins like XRP generating subpar returns.
Following a year where everything was set up perfectly for XRP's success, 2026 could prove far more challenging.
