Once arguably the hottest cryptocurrency investment, XRP (XRP 5.63%) has been in a slump since last July. It's down 28% over the last six months (as of Jan. 15).
While these kinds of dips aren't fun, they come with the territory when you invest in cryptocurrency. It's crucial to take a long-term outlook, especially during periods of volatility.
In XRP's case, it could deliver significant returns by the end of the decade for two key reasons.
Image source: Getty Images.
1. Taking a slice of the global payments market
Ripple, a blockchain company, launched XRP as a bridge currency for its payments network. Instead of maintaining pre-funded accounts with foreign currencies, banks can send international payments by converting their local currencies into XRP. Recipients then convert the XRP tokens to their local currencies.
There were $190 trillion in international payments in 2023, and that figure is expected to rise to $290 trillion by 2030, according to FXC Intelligence. It's a massive market, and while it's dominated by SWIFT, XRP offers speed and cost advantages. XRP transactions settle in three to five seconds with a fee of just $0.0002.
CRYPTO: XRP
Key Data Points
If XRP catches on with financial institutions as a SWIFT alternative, demand for XRP tokens could skyrocket.
2. XRP ETFs are now available
The SEC approved the first spot XRP ETFs in November, providing another way to invest in the cryptocurrency. Inflows have been strong so far, and XRP was the second-fastest cryptocurrency after Bitcoin to reach $1 billion in ETF holdings. At the time of this writing, XRP ETFs have $1.7 billion in assets under management (AUM).
ETF availability can help attract more investors to popular cryptocurrencies. It allows people to invest through brokerage accounts, including tax-advantaged retirement accounts. ETFs also provide a regulated way to invest in cryptocurrencies, which is important for institutional investors that can't buy cryptocurrencies directly through exchanges.
XRP is risky, but its role in cross-border payments and the availability of XRP ETFs give it long-term growth potential. While you shouldn't overcommit, you may want to add some XRP to your portfolio.
