XRP at the Crossroads: Why the Ripple Token Faces an Uncertain Future

The Promise Behind XRP

Ripple designed XRP as a bridge currency for its global payments network, enabling banks to settle cross-border transactions instantly while dramatically cutting transaction costs. Unlike most cryptocurrencies driven purely by speculation, XRP has a tangible use case: standardizing payments between financial institutions that operate on incompatible infrastructure.

The mechanics are compelling. A traditional international transfer involves multiple intermediaries and currency conversions, making it slow and expensive. Through the Ripple Payments network, banks can send XRP directly to each other, eliminating the middleman. Each transaction costs just 0.00001 tokens—essentially a fraction of a penny. With 100 billion total tokens and 60 billion currently in circulation, the supply structure allows Ripple to gradually release the remaining 40 billion to meet institutional demand.

From Regulatory Headwind to Tailwind

For years, XRP was shackled by regulatory uncertainty. In 2020, the SEC launched a lawsuit arguing that XRP should be classified as a financial security rather than a utility token. This classification battle devastated the token’s price, keeping it below $1 for several years and creating massive uncertainty for potential institutional adopters.

The tide turned dramatically in 2024. A favorable court ruling in August was followed by a complete case dismissal under the SEC’s new pro-crypto leadership. This regulatory breakthrough sent XRP soaring to $3.65—its highest price since 2018. The momentum also opened doors for spot XRP exchange-traded funds, potentially creating new demand channels through traditional financial advisors and institutional investors.

The Rally That Couldn’t Hold

Yet the celebration proved premature. XRP has plummeted 39% from its recent peak and now trades around $1.86, erasing much of the regulatory-driven gains. This correction reveals fundamental structural challenges that even favorable regulation cannot overcome.

The first obstacle is competition within Ripple’s own ecosystem. Banks don’t actually need to use XRP to enjoy instant cross-border transfers through the Ripple network—they can use traditional fiat currencies instead. Even more problematic, Ripple launched Ripple USD (RLUSD), a stablecoin offering near-zero volatility. For payment purposes, a stable asset is far superior to XRP, which can experience sharp price swings that expose banks to unexpected losses during settlement periods.

The second issue concerns ETF dynamics. While Bitcoin ETFs have attracted massive institutional capital, Bitcoin possesses traits that XRP lacks. Bitcoin is decentralized and has a hard-capped supply of 21 million coins, creating genuine scarcity and store-of-value properties. XRP’s centralized nature (with Ripple controlling 40% of tokens) and unlimited-feeling supply undermine its appeal as a wealth preservation vehicle. Consequently, ETF approvals may not trigger the institutional inflows that have benefited Bitcoin.

A Familiar Pattern Repeating

History offers a cautionary lesson. When XRP hit its 2018 record high, it had already faced these same structural issues. Within a year, the token collapsed over 95% from that peak. The current situation mirrors that pattern: XRP has achieved validation from regulators and access to new distribution channels, yet remains hampered by weak fundamental demand from its intended users and limited appeal as an investment asset.

If this cycle repeats—and there’s little reason to believe it won’t—additional significant downside lies ahead. The token’s utility as a payment currency is undermined by Ripple’s own stablecoin alternative, while its store-of-value proposition remains unconvincing compared to truly decentralized cryptocurrencies like Bitcoin.

Looking Five Years Out

Given these structural headwinds, a realistic scenario involves XRP settling well below $1 per token over the next five years. The recent bounce and ETF approvals have provided the token with legitimacy and distribution channels, but these advantages cannot overcome the fundamental market dynamics that have historically driven XRP’s spectacular collapses.

The Ripple Payments network may ultimately succeed in revolutionizing cross-border finance—that remains a genuine possibility. However, XRP itself may not be the primary beneficiary of that success. Instead, the network’s native stablecoin and fiat currency alternatives appear better positioned to capture payment flow value, leaving XRP to depend on speculative demand and the possibility that it eventually evolves into a viable store-of-value asset. Both outcomes remain unlikely, making caution the prudent approach for investors considering large positions in the token.