The Future of XRP: What Comes Next?

The price of Ripple’s cryptocurrency, XRP, has recently soared to $2.46 from $0.52 in November 2024, making it the third-largest cryptocurrency globally with a market capitalization of approximately $141 billion, following Bitcoin and Ethereum. This surge in XRP was more significant than other cryptocurrencies, buoyed by hopes for a crypto-friendly approach post Trump’s U.S. presidential victory. The positive trajectory of XRP can be attributed to favorable developments surrounding its legal battles.

Looking ahead, Ripple has already introduced the RLUSD stablecoin, supported by USD cash, government treasury securities, and other cash equivalents. Besides the broader crypto market uptrend, several factors could fuel XRP’s future growth. One key catalyst could be the potential approval of Ripple’s ETF this year. Data from Polymarket suggests a 70% chance of an ETF approval for Ripple, with the SEC currently reviewing four applications from major players.

Historically, when Bitcoin and Ethereum saw ETF approvals, their prices surged significantly. If XRP secures ETF approval, it could gain momentum due to enhanced market legitimacy, institutional investor access, and increased retail participation.

Beyond ETFs, Ripple’s core business is crucial. The company leverages XRP for swift and cost-effective international money transfers. Any improvements in Ripple’s operational performance could drive XRP’s price higher. The resolution of its legal battle with the SEC, particularly if the case is dismissed or settled amicably, could act as a positive catalyst.

While cryptocurrencies, like XRP, carry high risks and sometimes underperform stock markets, they’ve shown strong growth potential. For instance, XRP’s returns varied from 278% in 2021 to -59% in 2022, 81% in 2023, and 233% in 2024. Comparatively, the S&P 500 saw returns ranging from 27% in 2021 to -19% in 2022, 24% in 2023, and 23% in 2024. Amidst this volatility, Trefis’ High-Quality Portfolio offered better returns with lower risk compared to the S&P 500 over the last four-year period.

While XRP has experienced growth and volatility in recent years, investing in a diversified portfolio like the Trefis High-Quality Portfolio could offer consistent outperformance and reduced risk exposure.