XRP Soars to Third-Largest Cryptocurrency While Eyes Are on Future Gains

The price of Ripple’s cryptocurrency, XRP, has surged almost 5 times from $0.52 in November 2024 to $2.46 today. With a market capitalization of approximately $141 billion, XRP now ranks as the world’s third-largest cryptocurrency, trailing only Bitcoin and Ethereum. This impressive rise comes in the wake of Donald Trump’s recent U.S. presidential election victory, which sparked hopes for a more favorable regulatory environment for digital currencies. A key factor in XRP’s strong performance can be linked to positive developments in its ongoing legal battles. For more on XRP’s remarkable growth, refer to our earlier note entitled Up 300% In A Month, XRP Is Just Getting Warmed Up.

What Could Propel XRP Even Higher?

Looking ahead, Ripple has introduced the RLUSD stablecoin, fully backed by cash, government treasury securities, and other cash equivalents. Beyond the broader cryptocurrency rally, several factors could further boost XRP.

ETF Approval on the Horizon

One possibility is the potential approval of Ripple’s exchange-traded funds (ETFs) this year. Data from Polymarket indicates a 70% probability of approval. The SEC is presently reviewing four ETF applications for XRP from 21Shares, Bitwise, Canary Capital, and WisdomTree. Approval chances appear to have increased with Paul Atkins, known for his support of cryptocurrencies, leading the SEC under Trump’s administration.

In historical context, Bitcoin experienced a 60% spike in 2021 following the approval of its first ETF, while it doubled its price in 2024 after receiving approval for its spot ETF. Ethereum also saw a 42% increase after its ETFs were approved last year. An ETF approval could inject new energy into XRP’s rally, enhancing market legitimacy, attracting institutional investors, and making it easier for retail participation.

Ripple’s Business Vitality Matters

Beyond ETFs, it’s important to examine Ripple’s operations. Ripple provides a digital payment network that uses XRP for quick, low-cost international money transfers. If Ripple improves its core business operations, XRP’s value will likely rise. Recent legal victories, including the determination that XRP is not a security, could set the stage for future growth. Should the SEC dismiss its case against Ripple entirely, it would be a boon for XRP. A favorable settlement would also bolster investor confidence. It’s also likely that Ripple will forge new partnerships, boosting the adoption of its payment network. These advancements could serve as critical drivers for XRP’s growth in the future.

XRP’s Historical Performance and Market Risks

It’s well-known that cryptocurrencies are high-risk investments, and XRP hasn’t consistently outperformed traditional stock markets. Over the past few years, XRP’s returns have fluctuated significantly: 278% in 2021, -59% in 2022, 81% in 2023, and 233% in 2024. In comparison, the S&P 500 delivered returns of 27% in 2021, -19% in 2022, 24% in 2023, and 23% in 2024, showcasing that XRP underperformed the S&P during 2022.

Moreover, consistently outperforming broader markets has been challenging for both stocks and cryptocurrencies in recent years. While XRP has seen significant gains, it has also experienced notable volatility. In contrast, the Trefis High-Quality Portfolio, composed of 30 stocks, has yielded better returns with less risk compared to the S&P 500 index over the past four years, indicating a more stable investment option.

[1] Returns as of 1/6/2025

[2] Cumulative total returns since the end of 2016

[3] XRP returns are calculated from the end of 2017.

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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.