Should You Buy XRP While It's Under $4?

XRP (XRP 3.36%) has seen a remarkable rise recently, leaving many investors wondering how much further it can go. This cryptocurrency has had a tumultuous journey, struggling from January 2022 until late 2023 when its performance lagged behind Bitcoin (BTC 3.32%) and the S&P 500 (^GSPC 0.53%). In 2024, while other digital currencies and stock markets were surging, XRP continued to face challenges.

However, things began to change for this asset. From November 11 to January 21, the XRP price surged by more than five times:

XRP Price data by YCharts

Five months ago, when XRP was under $0.60 per coin, I thought it was a promising investment. I reiterated my position in mid-December, recommending it just below the $3 mark. The key question for potential investors now is whether XRP has reached its peak, or if it has more potential for growth.

Factors Driving XRP's Recent Surge

The surge in XRP's price can be attributed to several factors:

• The anticipation of a supportive environment for cryptocurrencies has increased, particularly with the expected emergence of a crypto-friendly administration. This could be beneficial for XRP, which has been embroiled in a high-profile SEC lawsuit for over four years.
• Ripple Labs recently introduced a new stablecoin called Ripple USD (RLUSD), which aims to enhance the RippleNet payment system. This stablecoin will facilitate more stable international payments, particularly for larger organizations managing significant transactions.
• Ripple USD offers capabilities beyond just serving as a digital currency. It can also be used to 'tokenize' real-world assets, which allows the ownership of various securities to be transferred globally.
• The stablecoin also creates interoperability between XRP and Ethereum (ETH 5.65%), granting access to the decentralized finance (DeFi) market.
• With the recent launch of cryptocurrency ETFs tracking Bitcoin and Ethereum, there are predictions for further ETF developments focusing on XRP. Its current market cap of $182 billion makes it a strong contender for potential inclusion in new funds.
• Lastly, there has been a noticeable increase in the number of active XRP accounts and transaction volumes on the RippleNet, showing real-world demand and use of the XRP currency.

While these developments are promising, it is essential for investors to remain cautiously optimistic until Ripple USD and other supporting features are fully implemented.

Future Outlook for XRP

Although it is difficult to guarantee consistent upward movement for XRP throughout the year, the historical trends in the cryptocurrency market suggest a positive outlook for major digital currencies in 2025. XRP seems well-positioned to surpass the $4 mark soon.

Despite this potential, it's important to be aware of possible price corrections. Although XRP is currently among the largest cryptocurrencies, ongoing developments may influence its long-term standing.

Currently, XRP remains a significant investment in my own portfolio since its price surge. However, it's worth noting that I have not purchased additional coins since December 2020. For those who have yet to enter the market, now could be an opportune time to invest in XRP.

That said, caution is advised, as the high price points may present risks if growth expectations are not met. There are other investment opportunities in the cryptocurrency landscape that may also hold promise.

Disclaimer: The author holds positions in Bitcoin, Ethereum, and XRP. This information is for educational purposes and does not constitute investment advice.

XRP, cryptocurrency, Ripple, investing