XRP (XRP -1.85%), the native cryptocurrency of the Ripple payment network, was launched in 2013 with the earliest trading price of $0.0058893 per token. By Jan. 4, 2018, its price had soared to an all-time high of $3.84.
That rally would have turned a $100 investment into more than $65,200. But today, XRP trades at about $0.48, so that investment would have shrunk to about $7,980. A 7,880% gain in 11 years is still pretty impressive, but can XRP rise above the $1 threshold again by the end of 2025? Let's review its near-term challenges to find out.
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Why did XRP lose its momentum?
Ripple's payment network uses a blockchain-based ledger to route real-time gross payments, remittance transfers, and currency exchange transactions. It claims the approach can provide its customers with secure, instant, and "nearly free global financial transactions of any size with no chargebacks."
Several smaller financial institutions -- including Travelex Bank, Tranglo, and Sentbe -- use Ripple's XCurrent network as an alternative to the SWIFT (Society for Worldwide Interbank Financial Telecommunication) protocol used by most banks.
As Ripple expanded, it expected XRP to gain more traction as a crypto payment option across its network. But that didn't happen, and XRP still isn't as widely accepted for payments as Bitcoin (BTC -0.10%) or Ether (ETH -0.88%).
Some investors also didn't consider XRP a true cryptocurrency since it wasn't mined with the proof-of-work (PoW) or proof-of-stake (PoS) protocols used by Bitcoin and Ether, respectively. It also pre-mined its entire supply of 100 billion tokens prior to its market debut, but it locked up 55 billion of those tokens in escrow accounts spread across its blockchain in 2017. It periodically releases some of the tokens from its escrow accounts to stabilize its own liquidity and supply.
So, why has XRP's price been so volatile?
XRP's price spiked to its record high in 2018 as Bitcoin's rally lifted the market's smaller cryptocurrencies. But by March 2020, its price had dropped to $0.14 as the initial impact of the pandemic and competition from newer, faster, and more efficient blockchain platforms, like Ethereum and Solana (CRYPTO: SOL), drove away the bulls. One of Ripple's founders, Jed McCaleb, has also been continuously liquidating his 9 billion XRP tokens since his departure from the company in 2014.
The U.S. Securities and Exchange (SEC) then sued Ripple in December 2020 for raising $1.3 billion through an offering of XRP tokens, alleging the sale was an illegal transaction of unregistered securities. Ripple scored a major victory against the SEC last July after a U.S. judge ruled that XRP tokens weren't unregistered securities, but the final trial started just this April.
Ripple previously held a major partnership for cross-border transactions with the U.S. money transfer company MoneyGram. However, MoneyGram terminated that deal in February 2021 after the SEC's lawsuit against Ripple sparked a class action lawsuit against the company. MoneyGram subsequently partnered with Ripple's rival Stellar (CRYPTO: XLM) instead.
But even as XRP faced all those headwinds, the buying frenzy in growth stocks, meme stocks, and cryptocurrencies propelled its price to a three-year high of $1.84 on April 14, 2021. Unfortunately, XRP lost its luster again after that brief rally as investors focused on its competitive and regulatory challenges again. Rising interest rates exacerbated that pressure by driving investors away from cryptocurrencies and other speculative investments.
What are XRP's catalysts?
The biggest near-term catalyst for XRP would be a favorable outcome for the SEC lawsuit. The SEC initially wanted to fine Ripple $2 billion for its token offering, while Ripple repeatedly insisted on paying only a $10 million fine. The SEC recently lowered its demand to just $102.6 million, but Ripple is sticking with its original offer. If Ripple can score a decisive victory against the SEC or force it to reduce its fine again, XRP's price could stabilize and rally through the end of 2025.
The second major catalyst would be lower interest rates. If the Fed finally starts cutting interest rates, investors will likely rotate back toward cryptocurrencies. Since XRP already runs on Ripple's established payment network, it could gain more traction than other altcoins, like Dogecoin (CRYPTO: DOGE), which have limited real-world uses.
Lastly, expanding its RippleNet blockchain to support more applications beyond financial transactions could make it a compelling option for developers of decentralized apps (dApps), crypto tokens, and other crypto assets.
Does it have a shot at doubling to $1 again?
For now, the forecasts for XRP are all over the map. For 2025, Binance's investors have a consensus forecast of $0.54, Coinlore and Westarter pegged their estimates just above $1, and CoinPedia aims even higher with an average range of $2.47 to $3.38. Personally, I think XRP has a good shot at hitting $1 by the end of 2025 if it wins the SEC lawsuit and the Fed cuts interest rates. But if those two things don't happen, its price could stagnate or decline over the next few years.
