New spot ETFs could push billions of dollars into XRP, driving its price higher.
Institutional adoption of the XRP blockchain could lead to an increase in demand for the new token.
Although some analysts have suggested that XRP may reach $25, the all-time high is still only $3.84.
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One of the most attractive major cryptocurrencies right now is XRP(CRYPTO: XRP)which has already shown its dramatic growth potential. In the months following last year’s presidential election, XRP surged more than 400% and looked set to hit a new all-time high above $4.
However, XRP has faced some rough patches since then and is now trading at a modest price of just $2.50. However, hope is eternal and many analysts believe that XRP is not valued anywhere near where it should be. If they are right and they eventually get to where they think they should be, loading XRP now could set you up for life.
A big reason for optimism is the imminent launch of new direct XRP exchange-traded funds. Several top investment firms have already filed with the Securities and Exchange Commission (SEC), and it is now increasingly likely that new ETFs allowing investors to buy XRP will be trading by the end of the year.
The government shutdown killed any chance of ETF approvals in October, but there is still hope that their approval will be among the SEC’s first operating orders in November. The Trump administration’s SEC has gone decidedly crypto-friendly and has already approved one ETF that tracks the price of XRP.
Image source: Getty Images.
At best, billions of dollars will soon flow into XRP, which will help boost its price. Earlier this year, it was expected that these new spot ETF investors could raise between $4 billion and $8 billion. Some analysts even suggested that XRP could rise to $25.
That would be nice, but still not enough to meet any standard definition of a “life-changing asset.” Twenty-five dollars would be a tenfold return on investment given the current price of XRP at $2.50. But that would only mean that $1,000 invested today would be worth $10,000 in the future. This is not enough to prepare you for life.
Frankly, XRP needs a huge catalyst that can increase 100x or even 1000x. The good news is that crypto investors have already embraced several of these catalysts.
In one scenario, the XRP blockchain will become the primary way banks and other financial institutions make international payments. And indeed, at least 20 financial institutions are now using XRP as a way to make international payments quickly and cheaply. If the rate of institutional adoption increases, the demand for the XRP token will also increase.
In another scenario, XRP could become the most important blockchain for the tokenization of real-world assets (RWA). It refers to the process of converting traditional financial assets into digital assets that can be traded and managed on the blockchain. Asset tokenization brings all kinds of market efficiencies and has been heralded as one of Wall Street’s next big financial trends. So if XRP bucks this trend, it could be huge.
Any one of these catalysts can be enough to generate the 100x increase needed for life-changing wealth. However, this is where things really bother XRP. If you actually look at blockchain metrics, the numbers don’t back up all the hype. For example, in terms of Total Locked Value (TVL), XRP ranks just 48th among major blockchains. In other words, money can flow through the XRP blockchain, but it doesn’t stay there.
Ultimately, XRP is really just an intermediary currency used to exchange to and from different currencies. From this perspective, the overall utility of XRP can easily be replaced by stablecoins, which are digital currencies pegged to the US dollar on a 1:1 basis. Stablecoins could replace XRP as a great way to send money internationally, reducing any potential utility of XRP.
Also, keep in mind: In over a decade of trading, XRP’s all-time high is only $3.84. So despite the relentless hype and speculation surrounding XRP and Ripple (the company behind the XRP token), the potential for growth may not be as great as some people think. If so, XRP could double in value.
For this reason, it is difficult to understand how investing in XRP can help you in your life. It is true that XRP has a compelling future growth story and may one day reach $25 or more. This could be a solid addition to a diversified crypto portfolio. But I’m looking elsewhere for a cryptocurrency that could provide truly life-changing wealth.
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Dominic Basulto has a position in XRP. The Motley Fool has positions and recommends XRP. The Motley Fool has a disclosure policy.
Can Buying XRP Help You Live Today? originally published by The Motley Fool.
