The formerly high-flying cryptocurrency XRP (XRP +2.40%) is down a head-spinning 60% over the past six months. That might not sound like the type of investment that could set you up for life.
However, there are plenty of catalysts that could send XRP higher over the next few years. So is now the time to take a contrarian view of XRP, when it's trading for a bargain-basement price of just $1.45?
XRP's upside potential
Of course, the term "set you up for life" is very subjective. Let's say, purely for the sake of argument, that the goal is to transform a modest upfront investment in XRP into $1.5 million. According to many people, that's approximately how much you would need to save for retirement in order to live comfortably.
That's actually harder than it sounds. Just do the math. In order to turn $1,000 into $1.5 million, investors would need to see a 1500x return on their investment. Even if you are willing to up the ante and invest $10,000 into XRP, you would need to see a 150x return on your investment.
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That's just not very likely. Let's say XRP falls to the $1 price level, which is looking more and more likely by the day. XRP would then need to hit a price of $150 at some point in the future in order to set you up for life.
At that price, XRP would have an implied market cap of $13.5 trillion. That's roughly 10 times the current market cap of Bitcoin (BTC +2.42%), the world's most valuable cryptocurrency.
Potential catalysts for XRP
To get to such stratospherically high valuations, a lot would need to happen for XRP. Its blockchain ledger would likely need to become a cornerstone of the world's financial system. Major Wall Street financial institutions would need to embrace XRP in droves. And XRP would need to become more than just a bridge currency for moving money across borders using blockchain technology.
The good news, if you're thinking about investing in XRP, is that plenty of optimistic scenarios have been proposed for XRP in the past. Just a few years ago, there was rampant speculation that the Ripple payment network, powered by XRP, would replace the SWIFT payment network as a way of moving money quickly and cheaply around the world.
Beware the hype and buzz
Just keep in mind: Much of the hype and speculation that has surrounded XRP in the past has never delivered as planned. In more than a decade of trading, XRP has never once traded higher than a price of $3.84.
CRYPTO: XRP
Key Data Points
That has me thinking that even 10x upside for XRP might be asking too much. XRP might turn out to be a nice little investment that doubles or even triples in value one day, but I'm not holding my breath, waiting for life-changing wealth to materialize. If you're looking to turbo-charge your investment returns, it could be time to look elsewhere.
