Ripple is a San Francisco-based fintech company that utilizes blockchain technology and the digital asset XRP to facilitate fast, affordable, and reliable cross-border payments and transactions. Developed in 2012, Ripple aims to revolutionize how money moves around the world by providing financial institutions with the ability to transact directly and instantly across national borders.
At the core of Ripple’s solutions is the digital asset XRP, which acts as a bridge currency in Ripple’s payment flows. XRP allows liquidity providers to carry out rapid cross-border transactions without the need to pre-fund nostro accounts in destination currencies. This enables faster, cheaper, and more efficient global payments.
The price of XRP rose dramatically in 2017, reaching an all-time high of $3.84 in January 2018 and giving it the distinction of briefly becoming the second largest cryptocurrency by market capitalization behind Bitcoin. However, XRP’s price has declined significantly since then and has been rangebound between $0.20 to $0.80 for most of 2022. The 2023 year-long price stagnation begs the question – is XRP still a good investment in the next 30-50 years?
In this in-depth analysis, we will assess Ripple’s real-world use cases and adoption, analyze recent XRP price movements and market conditions, and determine whether XRP remains a worthwhile long-term investment despite the ongoing SEC lawsuit against Ripple Labs.
Ripple’s Use Cases and Adoption
Ripple operates two main products – RippleNet and On-Demand Liquidity (ODL) – that allow financial institutions to seamlessly transact across borders.
👉 RippleNet
RippleNet is Ripple’s global payments network that connects banks, payment providers, and corporates enabling them to send and receive payments instantly. It leverages XRP in some cases as the bridge asset to eliminate pre-funding of destination accounts and enable real-time cross-border transactions and settlement.
Over 300 customers now use RippleNet, including banks like Bank of America and SBI Remit, payment providers like MoneyGram, and companies like MercadoLibre. Overall, RippleNet sees over $10 billion in transaction volume each year.
👉 On-Demand Liquidity
On-Demand Liquidity (ODL) is Ripple’s XRP-powered payment solution that eliminates the need for pre-funded nostro/vostro accounts. ODL leverages XRP as a real-time bridge between currencies, allowing liquidity providers to free up capital and accelerate cross-border payments.
ODL’s usage has grown more than 600% from 2020 to 2021. It is now available in over 20 countries for key payment corridors like Mexico, the Philippines, and Africa.
For example, MoneyGram utilizes ODL for 10% of its Mexican peso transactions, saving over $12.5 million in market costs in 2021. Furthermore, Japan’s SBI Remit saw its transaction times between Japan and Thailand cut from over 2 days with conventional systems to just 20 seconds using ODL.
The rapidly expanding footprint of RippleNet and ODL highlights the utility and adoption of Ripple’s payment solutions with XRP serving as a critical bridge asset.
Analysis of XRP Price and Market Conditions
Despite growing real-world use, the price of XRP has declined substantially from its peak in early 2018. Let’s analyze recent price movements, trading volumes, and market conditions affecting XRP’s valuation.
Price and Trading Volume
After surging to an all-time high of $3.84 in January 2018, XRP has seen a significant decline over the ensuing crypto bear market. Its price dropped below $0.30 by the end of 2018 and has ranged between $0.20 to $0.80 through most of 2022.
XRP’s trading volume has also diminished since early 2018, falling from over $4 billion daily to averaging under $2 billion per day in 2022. This decline in price and volume can be attributed to a combination of factors.
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Factors Affecting XRP Price
The primary factors that have depressed XRP’s price include:
- Broader crypto bear market – The 2018 crypto bubble took the entire market down, including XRP. The ongoing 2022 crypto winter has also weighed on prices.
- SEC lawsuit – The SEC filed a lawsuit against Ripple Labs in December 2020 alleging XRP to be an unregistered security. This regulatory uncertainty has made exchanges delist XRP and limited its demand from US investors.
- Limited retail investor interest – Unlike tokens like Dogecoin, XRP has not benefited from surges of retail investor interest and hype during 2021-2022. Its price has stagnated as a result.
However, there are also positive developments that could boost XRP’s valuation:
- Expanding liquidity – Ripple continues to rapidly expand ODL’s usage, growing XRP liquidity for cross-border payments in key corridors.
- New exchange listings – XRP has continued to get listed on top exchanges like Bitstamp and Coinbase, expanding its accessibility.
- SEC lawsuit outcome – A favorable resolution to the SEC case could remove regulatory uncertainty and revive interest in XRP among US exchanges and investors.
Is XRP a Good Long-Term Investment?
Given the ongoing SEC lawsuit and XRP’s stagnant price, is it still a worthwhile long-term investment? Let’s assess the bull case for XRP’s future outlook.
Expanding Real-World Utility
As highlighted earlier, Ripple is rapidly expanding the utility and adoption of XRP through RippleNet and ODL.
Ripple plans to bring over 50 countries onto RippleNet by 2023 – the time of this publication. It is focused on building liquidity in crucial corridors like Mexico, the Philippines, Brazil, and across the Middle East and Africa. These efforts will significantly expand the role of XRP in cross-border transactions.
Additionally, Ripple is working on integrations with NFT marketplaces, DeFi protocols, and central bank digital currencies to further extend XRP’s utility. These developments could make XRP indispensable for payments outside of just fiat currencies.
As XRP’s utility for real-world transactions grows, its price stands to benefit significantly.
Regulatory Clarity
The SEC lawsuit has been a black cloud over XRP for over two years now. However, legal experts believe the case is headed towards a settlement this year rather than going to trial. A settlement would likely involve a fine for Ripple but stop short of designating XRP as a security.
Such an outcome would remove the regulatory uncertainty that has depressed XRP investment and allow US exchanges to confidently relist the token. This renewed regulatory clarity and investor demand stands to be a major catalyst for XRP.
Market Cycles Suggest Price Appreciation
Like all cryptocurrencies, XRP is subject to boom and bust cycles driven by investor sentiment and speculative manias. After the 2018 bubble and ongoing 2022 crypto winter, the probability of the next bull market driving prices upward is high.
Historical data shows that the crypto market moves in approximately 4-year cycles. The next peak is likely in 2025-2026. This would align with when XRP previously reached its all-time high. If past cycles repeat, XRP could again trade between $2 to $5 in the next bull market.
Increasing Scarcity to Support Price
An underappreciated aspect of XRP is that it has a fixed maximum supply of 100 billion tokens, much lower than currencies like Ethereum. Additionally, the amount held in escrow by Ripple decreases every month as 1 billion XRP tokens are released.
This gradual reduction of XRP’s circulating supply serves to make the currency scarcer over time. Basic economics suggests that declining supply should support higher prices, all else being equal.
Conclusion: XRP Remains a Promising Long-Term Bet
In summary, while the SEC lawsuit and stagnant price have dampened interest in XRP recently, its fundamentals and long-term investment thesis remain strong.
Ripple continues to expand the utility of XRP through RippleNet and ODL. A settlement of the SEC case later this year could remove regulatory barriers to XRP investment. Market cycles suggest the next crypto bull run will commence between 2025-2026, possibly propelling XRP to new highs. And the currency is becoming scarcer over time thanks to in-built supply reductions.
For investors with a multi-year time horizon willing to stomach volatility, XRP remains a promising investment with sizable upside potential based on increasing real-world adoption and use cases. While short-term price fluctuations are likely, Ripple’s innovations and the prospect of a future crypto bull market make a compelling case for adding XRP to a diversified cryptocurrency portfolio.
