The cryptocurrency industry is off to a brutal start to 2026. The total value of all coins in circulation has fallen to just $2.3 trillion, down 47% from last year's peak. XRP (XRP +2.18%), which is the world's fifth largest cryptocurrency, is faring even worse with a whopping 65% decline from its record high.
XRP was created by a company called Ripple, which designed a unique payments system that allows banks to send money around the world instantly, with negligible fees. But although XRP is being swept up in the broader crypto crash right now, it also faces some unique structural issues that could place additional pressure on its value.
XRP trades at $1.26 per token as I write this; here's why it might be on the way to $1 (and potentially even lower) in 2026.
Image source: Getty Images.
XRP's real-world utility might be fading
Despite the digitization of the global banking system, it's still quite fragmented. Some banks use major networks like SWIFT (Society for Worldwide Interbank Financial Telecommunication), whereas others don't, so transactions between them often require intermediaries, which is why they take days to settle and are quite expensive.
Ripple Payments was designed for direct cross-border transactions between banks, no matter what existing infrastructure they use, which results in practically instant settlements. Ripple launched XRP to standardize each transaction and reduce costly foreign exchange fees.
For example, an Italian bank can send XRP to a Korean bank instead of sending euros, typically for a total cost of just 0.00001 tokens (a fraction of one U.S. cent).
CRYPTO: XRP
Key Data Points
XRP should, theoretically, increase in value as more banks use Ripple Payments, but there are a few structural problems. First, bridge currencies aren't designed to be held long-term. A bank that receives a payment in XRP will typically convert it into their domestic currency almost instantly so they can carry on with their business. Therefore, while the Italian bank in my above example was a buyer of XRP, the Korean bank would be an equal seller, so no real value would be created for the token.
Second, banks don't have to use XRP with Ripple Payments to benefit from instant transfers, because the network supports the use of fiat currencies. As a result, there isn't always a direct correlation between activity in Ripple Payments and XRP's value.
Finally, Ripple launched a stablecoin called Ripple USD (RLUSD +0.02%) in late 2024, which is much better suited for making payments because it experiences practically no volatility. The value of XRP, on the other hand, can fluctuate significantly in short periods of time, leaving banks with potential losses.
Ripple USD is built on the XRP ledger, so users still have to pay fees in XRP when they use the stablecoin. That will create some residual demand for XRP, but probably not enough to drive sustainable upside over the long term.
Can XRP continue sliding to $1?
XRP hit a record high of $3.65 per token last July, and as I highlighted earlier, it has already declined by 65% from that level to trade at just $1.26. Unfortunately for investors, history suggests there might be further downside ahead.
After XRP set its previous record high in 2018, it proceeded to lose 96% of its peak value. If the current decline reaches a similar magnitude, then XRP could soon trade as low as $0.15 per token.
Since we have established that XRP's organic sources of demand (like Ripple Payments) are on shaky ground, we need to acknowledge that speculative investors have a significant influence over the token's value. This isn't a recipe for sustainable upside over the long term, as proven by other highly speculative cryptocurrencies like Dogecoin and Shiba Inu, which haven't set new record highs since 2021.
As a result, I think XRP will continue trending lower and eventually hit $1 per token during 2026, and there is a risk it falls even further.
