Should You Buy XRP When the Price is Below $4?

XRP has fluctuated between a low of $0.39 and a high of $3.40 over the past 52 weeks. A year ago, XRP still faced an uncertain future as the prolonged legal battles with the SEC continued. However, buyers quickly returned as most of those regulatory hurdles faded by the end of 2024. Interest rates fell and the cryptocurrency-friendly stance of President Donald Trump pushed its price even higher. XRP has since fallen back and is currently trading at around $2.20 per token, still down 40% from its all-time high of $3.84 in January 2018. Should investors continue to buy XRP now and expect it to surge to a new record high above $4? Let’s take a look at the short-term catalysts of this token to make a decision. Why is the SEC pursuing Ripple? XRP was created in 2012 by the founders of Ripple Labs, a fintech company that promoted its blockchain as a cheaper, faster, and safer alternative to the SWIFT protocol ( the global interbank financial telecommunications association ) for transferring money. Ripple has used XRP as a bridge currency for some of its transactions. The founders of Ripple mined the entire supply of 100 billion XRP tokens before the launch, allocating 80 billion tokens to the company and the remaining 20 billion tokens to themselves. Subsequently, Ripple periodically sold its own XRP tokens to fund the company's expansion. That fundraising strategy has attracted the attention of the SEC, which sued Ripple in 2020, arguing that Ripple was selling unlicensed securities through its XRP services. That lawsuit caused XRP to be delisted from major cryptocurrency exchanges, and Ripple lost some of its top customers. What Happened After the SEC Backed Down? In July 2023, a court ruled that XRP cannot be considered an unregistered security. This ruling did not end the SEC's lawsuit, but it did encourage top cryptocurrency exchanges to relist XRP. Last August, the SEC's lawsuit ended with a lighter-than-expected fine for Ripple. The SEC appealed that ruling, but recent rumors suggest they may completely withdraw that appeal. The conclusion of that lawsuit has driven most of the increase of XRP over the past year. Grayscale, the company that initially closed the XRP Trust in 2020 to respond to the SEC lawsuit, has also relaunched it as a closed fund ( CEF ) for accredited investors last September. Several other cryptocurrency companies have also applied for new XRP ETFs. What is the Next Major Driver for XRP? Many of Ripple's legal barriers have vanished over the past year, but the SEC needs to officially withdraw its appeal and officially declare that XRP is not a security. That clarity could encourage many financial institutions to adopt XRP as a bridge currency for their transactions. Ripple has recently applied for a U.S. banking license. If that regulation is approved, Ripple could use XRP as a liquidity bridge for more fiat transactions for high remittance markets such as India, Brazil, and the Philippines. Ripple has also launched pilot programs with several central banks to use XRP as a liquidity bridge between their national central bank digital currencies. If many banks and fintech companies adopt XRP as a liquidity bridge, its price will stabilize. If the SEC ultimately approves the first XRP ETFs, those funds could attract more retail and institutional investors and push its price even higher. XRP cannot really be measured by its scarcity like Bitcoin because it cannot be mined. It also cannot be valued by the scale of its developer ecosystem, as it does not support smart contracts like Ethereum and other proof of stake (PoS). However, the developers of XRP have added support for lightweight smart contracts primarily for payments into its ledger through "hooks" and the (API). They have also proposed developing sidechains that could support Ethereum-based smart contracts. These initial steps indicate that the XRP Ledger may eventually support more decentralized applications (dApp) in the future. But will the price ever rise to $4 and beyond? The price of XRP may stabilize as these favorable winds appear, but most of its short-term price targets fluctuate around the $3 level instead of $4. This is because it may require a lot of capital to push its price higher. With a market capitalization of $134 billion, a 75% increase to $4 would bring its valuation to $235 billion, making it equivalent to Ether, which has a market capitalization of $312 billion. Technically, XRP is a deflationary token, as new tokens cannot be minted and it burns ( a small amount with each transaction. However, there are still 59 billion coins in circulation, and that abundant supply may limit its price appreciation potential unless some large investors jump in. The potential fall of XRP may be limited at these levels, but I won't rush to buy it right now. Its price will remain below 4 dollars for a long time and it may be hard to gain more momentum unless all the catalysts mentioned above come into play. Therefore, for now, I want to stick with Bitcoin or Ether instead of XRP.