A New Reason to Invest in XRP and Hold It Long-Term

XRP's (XRP -0.59%) price has seen an impressive increase of 256% over the past three years, making it interesting that new substantial reasons to invest in it continue to emerge.

Despite this, a set of upcoming developments offers strong support for the idea that acquiring this cryptocurrency is a wise decision. Let's explore what is on the horizon and why these factors could propel XRP's value higher in the long run.

New ETFs Could Strengthen Financial Sector Ties

Like major cryptocurrencies such as Bitcoin and Ethereum, XRP might soon be included in various exchange-traded funds (ETFs) pending approval from regulators at the Securities and Exchange Commission (SEC). This was indicated by filings made in late January by several asset management firms, including Grayscale Trust and Purpose Investments.

Previously, the SEC's lawsuits against Ripple, the issuer of XRP, raised doubts about the possibility of ETF approvals. However, with the current administration's favorable stance toward cryptocurrency, it now seems likely that ETFs featuring XRP could be launched within the next year. This potential development could be a significant catalyst for XRP's price for several reasons.

The primary aim of these ETFs is to make XRP accessible as an investment for individuals with traditional financial accounts, such as retirement and brokerage accounts. Without an ETF, traditional investors would need to navigate additional barriers to purchase and hold XRP directly, such as signing up for extra services or utilizing specialized cryptocurrency wallets. While crypto enthusiasts might not be deterred, many investors would prefer to buy XRP as easily as any other stock or financial asset through standard trading platforms.

If these ETFs are approved, they are expected to generate increased demand for XRP and an uptick in trading volume. As of February 6, XRP had a 24-hour trading volume of approximately $8 billion.

As ETF investors come on board, fund managers will need to purchase XRP directly to replicate the investment performance of the cryptocurrency. This increased buying pressure is likely to uplift XRP's price and could also enhance network fees, providing additional funds for technology improvements.

Thus, the anticipated ETF developments are poised to bolster two key components of XRP's investment narrative, which is encouraging for current holders. It’s plausible that the announcement of ETF approvals could lead to a price surge for XRP.

Focus on Long-Term Growth Opportunities

The potential long-term benefits of operational ETFs far exceed any short-lived price increases following an approval announcement.

As XRP becomes further integrated with traditional finance through ETFs, RippleNet, the associated payment network, will have the opportunity to scale considerably. This growth may result in reduced transaction fees, faster processing times, or even increased marketing efforts to attract more users from traditional financial institutions, government bodies, or the general public. Such developments would significantly enhance XRP's appeal as a long-term investment, not just in 2025 but beyond.

Moreover, the current wave of ETF applications may just be the beginning. Future ETFs could potentially combine XRP with other cryptocurrencies, such as Bitcoin, or incorporate financial derivatives like futures, affecting the underlying coin's price more unpredictably.

Regardless of what the future entails, the emergence of XRP ETFs should be viewed as a positive trend, provided that the SEC grants approval. Therefore, if you're considering purchasing XRP, now may be an opportune time to do so, even if your plan is to hold it indefinitely.

XRP, ETFs, crypto