Rise 350% In 12 Months: Is XRP Still Worth Buying?

XRP (CRYPTO: XRP), the native cryptocurrency of the open-source XRP blockchain, has increased by approximately 350% over the past 12 months. But should investors continue to buy XRP after such a rapid bullish surge? Let's examine the bullish and bearish cases to decide. Looking Back at the Volatile Journey of XRP Over the Past 13 Years David Schwartz, Jed McCaleb, and Arthur Britto - the co-founders of the financial technology company Ripple Labs - created XRP in 2012. The three founders used XRP to fund Ripple's expansion, thus Ripple became the largest holder of XRP but actually does not control its open-source Ledger. The entire supply of 100 billion XRP tokens was mined before its launch, and Ripple has locked up more than half of its tokens in escrow accounts. Ripple periodically releases those tokens to stabilize liquidity. However, XRP cannot be actively mined like Bitcoin (CRYPTO: BTC) or other proof-of-work ( PoW ) tokens and does not support smart contracts for developing decentralized applications (dApp) like Ethereum (CRYPTO: ETH) and other proof-of-stake (PoS) blockchains. Ripple initially promoted the use of its XCurrent network as a cheaper, faster, and more secure alternative to the SWIFT protocol ( Global Interbank Financial Telecommunication Association ) widely used for transferring money. Some smaller financial institutions -- including Travelex Bank, Tranglo, and Sentbe -- have adopted XCurrent for their money transfer transactions.

Ripple may hope that some of those customers will adopt XRP as an alternative to fiat currency for their cross-border transactions. However, the volatility, regulatory challenges, and conservative banking strategy of XRP have limited its appeal. Ripple sold approximately $1.3 billion worth of XRP tokens in a series of coin offerings, but the United States Securities and Exchange Commission (SEC) sued the company in 2020, alleging that the company sold unregistered securities illegally. The lawsuit caused Ripple to lose some top clients. Some cryptocurrency exchanges also delisted XRP and the cryptocurrency asset management company Grayscale suspended XRP Trust. These obstacles made XRP a difficult cryptocurrency to love. However, last August, its battle with the SEC ended with a lower-than-expected fine. The SEC's subsequent efforts to pursue its lawsuit failed, and the two sides reached a final agreement earlier this month. After regulators withdrew, major cryptocurrency exchanges relisted XRP, Grayscale restarted its XRP Trust as a closed fund (CEF) for accredited investors, and several cryptocurrency companies applied for a new spot XRP exchange-traded fund (ETF). The decreasing interest rates and the rise of the Trump administration, which is friendly to cryptocurrencies, have attracted even more investors. What Are the Short-Term Catalysts for XRP? The biggest short-term obstacles for XRP are fading, but it also has a few potential catalysts in the future. The approval of the first spot price ETFs could confirm the existence of XRP and stabilize its price by attracting more mainstream and institutional investors. There are also persistent rumors about Ripple's initial public offering (IPO). If Ripple does go public, this could create more buzz for XRP and new capital to expand the XRP Ledger.

To expand its reach, Ripple plans to upgrade its on-demand liquidity feature (ODL), allowing users to directly use XRP for cross-border transactions across Africa, Latin America, and the Middle East. This expansion could attract new partnerships with more banks and money transfer companies. To attract more developers, the company plans to add more hook ( snippets of code to enable smart contract features ) on the XRP Ledger. The company may also integrate more sidechains ( independent blockchains ) to incorporate features of the Ethereum Virtual Machine ( EVM ), decentralized finance protocol ( DeFi ), dApps, and non-fungible tokens ( NFTs ) into its ecosystem. So is XRP still worth buying? The biggest obstacle for XRP is the prolonged lawsuit with the SEC. But now that the lawsuit has finally ended, its long-term future seems a bit unclear. It cannot be actively mined, its blockchain cannot be used to develop dApps, and most financial institutions do not want to adopt XRP transfers. In other words, XRP may find it difficult to surpass Bitcoin or Ethereum in the long run. Essentially, it has deflationary characteristics, but its limited appeal to developers and financial institutions makes it a risky investment. It might be worth a try if you expect the XRP ETFs or Ripple's IPO to hit the market, but investors should not expect to see a repeat of its massive growth over the past 12 months.