The recent crypto slump has weighed heavily on Ripple Labs' XRP (XRP +3.27%). The token is down over 60% on its all-time high, closing at $1.42 on Feb. 18. Unfortunately, XRP is likely to struggle further if the rout continues, which it may well do.
CRYPTO: XRP
Key Data Points
Standard Chartered recently slashed its 2026 target for XRP by 65% from $8 to $2.80. The investment bank also backpedalled on forecasts for Bitcoin and Ethereum, citing the harsh climate and liquidity challenges. That said, its XRP cut was the biggest and may reflect shifting perceptions about the token's utility.
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When will XRP recover?
XRP's immediate fate is closely tied to the wider market, where fear is driving prices. Many investors are asking what might cause a turnaround. There's limited appetite for risk, and liquidity hasn't really returned since $19 billion of leveraged positions got wiped out in a single October day.
Regulatory progress with the Clarity Act would certainly help. The bill, which would give a legal framework for the crypto industry, has stalled in the Senate. Negotiations continue, and there are hopes it will pass in the coming months.
Rate cuts could also ease the downward pressure. They often boost crypto prices, increasing liquidity and making investors more willing to take risks. However, the Fed is unlikely to make cuts before June.
The crypto winter may not end quickly, but Bitcoin and Ethereum have always erased their losses and gone on to set new highs. While there are no guarantees in crypto, I think this will happen again -- not least because of the major strides we've taken in adoption and institutional buying. However, we may first have to trudge through further sideways or downward action.
When confidence returns, XRP is likely to recover. Institutional buying continues, though inflows have ebbed. There's about $1.2 billion in XRP ETFs, which got the green light in November. Ripple's press releases show a steady stream of partnerships and regulatory progress in Europe and the U.S.
XRP's long-term prospects
Crypto adoption is finally happening. Established firms are actively integrating blockchain technology and have plans for stablecoins and tokenized products. Nasdaq and the New York Stock Exchange want to launch tokenized equity trading. Prices are struggling, but the fundamentals are better than ever.
Even so, I think XRP has a difficult path ahead. If a large portion of transactions move on-chain and established financial institutions adopt Ripple's XRP Ledger (its blockchain), XRP could soar. However, companies may choose other blockchains -- Solana is faster, Ethereum has a longer track record -- or build their own private systems.
Plus, XRP is important but not essential to Ripple, the private company behind the token. It is pursuing various blockchain avenues from global payments and custody solutions to stablecoins and tokenization. It is hard to see a direct benefit for XRP from companies, say, using Ripple's custody services. Moreover, they may opt to use its stablecoin, Ripple USD, as a payment bridge rather than XRP.
In the medium term, we can expect XRP to turn the corner alongside the broader market. However, I want to see clearer utility for XRP -- not Ripple -- before I'm optimistic long-term.
