XRP has declined nearly 40% from its July peak, yet many investors remain optimistic. Ripple, the company behind XRP, recently secured conditional approval for a national bank charter and has moved past its SEC case, leading bulls to anticipate a brighter future.
However, a fundamental issue persists: banks can adopt Ripple's technology without ever using XRP. RippleNet enables faster payments and lower costs while allowing institutions to stick with traditional currencies, eliminating the need for the cryptocurrency.
Ripple offers On-Demand Liquidity, which uses XRP as a bridge asset for cross-border transactions, but adoption is largely limited to smaller institutions with liquidity constraints. Major banks handling significant volume are not utilizing it.
This creates a disconnect in XRP's investment thesis. The core argument has been that more banking adoption would drive higher demand for XRP and increase its price. Yet, as banks fueling Ripple's growth bypass XRP entirely, that logic falters.
Ripple's push into a dollar-backed stablecoin further complicates matters. The company obtained conditional approval for a national bank charter to support RLUSD, its stablecoin. RLUSD could potentially replace XRP as the preferred bridge asset in On-Demand Liquidity transactions.
Most of XRP's value appears based on speculation and hype, which may fade over time, potentially leading to a price plummet.
The Motley Fool Stock Advisor analyst team recently identified what they believe are the 10 best stocks for investors to buy now, and XRP was not among them. The selected stocks could generate substantial returns in the coming years.
Stock Advisor's total average return is 958%, significantly outperforming the S&P 500's 196%. The service offers access to its latest top 10 list and an investing community built by individual investors.