Is XRP a Buy Right Now?
In this news:
Key takeaways
- XRP trades at $1.50 with an all-time high of $3.84 reached in January 2018.
- A capped supply of 100 billion coins creates high implied market caps at elevated prices.
- Stablecoins increasingly handle bridge currency functionality due to price stability.
For XRP (XRP -0.70%) investors, hope springs eternal. While XRP is currently trading at just $1.50, many investors believe it could eventually reach $10, $100, or even $1,000.
If that's the case, then XRP is most certainly a buy. You're getting access to 10x, 100x, or 1,000x upside potential. But just how realistic are those future-looking price targets for XRP?
A potential ceiling price for XRP
In more than 14 years of trading, XRP has never traded above $3.84 -- and that was back in January 2018. In crypto terms, that's ancient history.
That relatively low price is particularly perplexing, given that XRP has had some truly explosive breakout performances over the past decade. For example, in 2021, XRP soared by 275%. In 2024, XRP soared by 238%.
But, even last year, amid all the hoopla about a pro-crypto administration, the high-water mark for XRP was just $3.65. And that leads to an inconvenient question for XRP investors: Is $4 the floor or the ceiling for XRP?
What's keeping the price of XRP down?
The problem, quite frankly, is that several factors are keeping XRP's price down. A fundamental problem is XRP's capped supply of 100 billion coins. That's an absurdly high number, and it makes any calculation of future market cap fraught with peril.
For example, let's say XRP hits $10 in the next few years. If all 100 billion coins are in circulation, XRP would have an implied market cap of $1 trillion. That's roughly 60% of the current market cap of Bitcoin and would easily make XRP the second-most valuable cryptocurrency in the world, surpassing Ethereum.
A price of $100 is even more problematic, since it would imply a market cap of $10 trillion. That's higher than the market cap of any publicly traded company in the world. Is XRP really worth more than Apple and Nvidia combined?
At the end of the day, XRP is just a bridge currency that powers the Ripple payment network. Investors can swap into and out of XRP to move money around the world. But that functionality is increasingly being handled by stablecoins, which are pegged 1:1 to the U.S. dollar. The growing popularity of stablecoins makes sense, given that the price of XRP can oscillate wildly, while the price of a stablecoin is, well, stable.
That is not to say that XRP does not have upside potential. It does. Unfortunately, that upside might be capped at $4. If you're expecting XRP to soar much higher than that, you might need to ratchet down your expectations. In more than a decade, XRP has never traded above $3.84.
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