XRP, the native token of Ripple’s blockchain, has experienced an extraordinary rally in recent months, surging 480% and reaching a market cap of $297 billion. Former Goldman Sachs analyst Dom Kwok believes XRP could continue its ascent, potentially surpassing Ethereum. But is this optimism justified?
What Makes Ripple and XRP Unique?
Ripple’s blockchain facilitates real-time payments, remittance transfers, and currency exchanges, offering a faster, cheaper, and more secure alternative to the traditional SWIFT system. Financial institutions such as Travelex Bank and Sentbe already utilize Ripple’s XCurrent network to process fiat transactions.
Although Ripple launched XRP in 2013 with hopes that its clients would adopt the token for financial transactions, most initially opted to use its blockchain for fiat payments instead. XRP has faced criticism for its lack of scarcity and utility compared to other cryptocurrencies like Bitcoin or Ethereum.
Unlike proof-of-work (PoW) or proof-of-stake (PoS) tokens, XRP cannot be mined or staked for rewards. Ripple pre-mined its entire supply of 100 billion XRP tokens before launch, locking over half in escrow accounts to stabilize liquidity. Ripple’s blockchain also lacks native functionality for decentralized apps (dApps) or smaller token creation, often leading to skepticism about its long-term potential.
Why XRP’s Price Is Skyrocketing
XRP’s impressive rally stems from several key developments:
- Resolution of the SEC Lawsuit
- The SEC lawsuit against Ripple, which claimed XRP token sales were illegal securities offerings, concluded last August with a lighter-than-expected fine. While the SEC has since appealed the ruling, XRP has regained traction with major trading platforms relisting it, and Grayscale reintroducing its XRP Trust as a closed-end fund.
- Trump’s Pro-Crypto Policies
- Donald Trump’s election victory in November 2024 significantly boosted XRP sentiment. The appointment of crypto-friendly Mark Uyeda as acting SEC chair, combined with expectations of a more relaxed regulatory environment, signals a brighter outlook for Ripple and XRP.
- Tokenization of Real-World Assets (RWAs)
- Ripple plans to integrate Ethereum-compatible smart contracts into a new sidechain tethered to its XRP ledger, making it more appealing to Ethereum-based developers. Additionally, Ripple has positioned itself as a platform for tokenizing RWAs like real estate and art. Unlike NFTs, these tokenized physical assets offer shared ownership among multiple token holders, potentially increasing XRP usage.
- Approval of a USD-Pegged Stablecoin
- In December, Ripple received approval from the New York Department of Financial Services to launch a stablecoin pegged to the U.S. dollar. This move is expected to attract more financial institutions and further stabilize XRP’s price.
Can XRP’s Price Really Double?
Dom Kwok suggests that XRP could rise another 120%, potentially surpassing Ethereum in market cap. This projection hinges on the anticipated growth of Ripple’s ecosystem and its utility in tokenizing RWAs.
However, Ethereum’s established dominance in powering dApps, tokens, and NFTs makes it unlikely that XRP will overtake it anytime soon. While XRP’s trajectory is promising, it may not be ready to challenge Ethereum’s position as the second-largest cryptocurrency just yet.
Conclusion
XRP’s recent gains underscore its resilience and renewed relevance in the crypto market. A combination of regulatory clarity, Trump’s crypto-friendly administration, and Ripple’s strategic innovations could sustain its upward momentum. While the potential for significant growth exists, investors should weigh the risks and consider XRP’s limitations compared to leading cryptocurrencies like Ethereum and Bitcoin.