Cryptocurrency investors are having a very tough year. The total value of all coins and tokens in circulation just fell below $2.4 trillion, marking a 45% decline from last year's record high of $4.4 trillion. Some individual cryptocurrencies are faring even worse, like XRP (XRP +4.68%), which is currently down 66% from last July's peak.
XRP was created by Ripple. It standardizes transactions on the Ripple Payments network, providing banks with a low-cost way to instantly send money across borders. Although XRP has a real use case that should theoretically support its value, the token faces structural problems that will be extremely difficult to overcome.
History suggests that more downside might be on the horizon. Here's where I predict the token will be trading five years from now.
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The rise of stablecoins could render XRP obsolete
Banks around the world use different payment infrastructures, which means they often need an intermediary (middleman) when sending money to one another. This costs money and can delay settlement by several days, creating a suboptimal experience for customers on both sides of the transaction.
Ripple Payments sits on top of existing payment infrastructure, facilitating direct communication between banks so they can settle transfers between one another instantly. XRP can standardize those transactions. For example, instead of an Australian bank sending Australian dollars to a Japanese bank, it can send XRP, which eliminates foreign-exchange fees. A transaction of this kind will cost as little as 0.0001 XRP tokens, or a fraction of one U.S. cent.
However, using XRP isn't mandatory, and this is where the bullish thesis is falling apart. Banks can benefit from instant transfers through Ripple Payments by using fiat currencies, which means that even if the entire global banking system adopted the network, it wouldn't necessarily result in upside for XRP.
To make matters worse, Ripple launched its own stablecoin in 2024: Ripple USD (RLUSD +0.00%), which is a more functional alternative to XRP. Stablecoins are designed to maintain a consistent value, so they offer practically zero volatility. XRP, on the other hand, experiences wild swings in value, so there is a risk that banks will lose money even if they hold it for brief periods.
Since Ripple USD is a U.S. dollar-denominated stablecoin, some foreign banks might prefer a currency-neutral token like XRP. However, as a stablecoin, Ripple USD is also tightly regulated, which has security advantages. For example, Ripple retains the ability to reverse transactions upon a court order, reducing the risk of fraud.
XRP could be significantly lower in five years
XRP set a new record high of $3.65 per token last year, but it's now trading at just $1.16. History suggests that even further downside could be on the way, because the token plummeted by more than 90% after setting its previous all-time high in 2018. In fact, it traded below $1 for most of the seven-year period from early 2018 to late 2024.
CRYPTO: XRP
Key Data Points
For the most part, the fundamentals of XRP haven't changed much since then. If anything, they might actually be worse today, given the emergence of alternatives like stablecoins. If history were to repeat and XRP lost 90% of its peak value again, the token could fall to as low as $0.36 in the near future, and hover around that level for the next five years. Therefore, investors who buy it today could still face steep losses.
But I want to highlight one final issue that's worth keeping in mind. As a bridge currency, XRP wasn't actually designed to increase in value in perpetuity. Going back to my earlier example, the Australian bank would be a buyer of XRP, but the Japanese bank would be an equal seller when it converts its tokens into its domestic currency (the yen) to continue its business. Therefore, the transaction would have created no real value.
A cryptocurrency will only experience sustained upside if there is a pool of buyers who have an incentive to hold it, whether they are investors or users. Selling is a core tenet of XRP's purpose, which means its value will always face pressure. Both of its strongest rallies in the past (2017 into 2018 and 2024 into 2025) were fueled by speculative investors who were simply hoping someone else would come along and pay a higher price in the future.
This is known as the "greater fool theory," and it certainly isn't a foundation for true value creation.
