XRP (XRP), the native token of the XRP Ledger, has seen its value decline by nearly 40% over the past four months, significantly underperforming compared to Bitcoin (down 23%) and Ethereum (down 16%) during the same period. This discrepancy stems from their fundamental differences. XRP neither utilizes Bitcoin’s Proof-of-Work mechanism nor is it an Ethereum-style Proof-of-Stake token; therefore, it does not support mining or staking rewards. It also lacks native smart contract functionality, which limits its direct application within the decentralized application ecosystem. Fintech company Ripple Labs minted the entire 100 billion XRP supply before the token’s launch and still holds nearly half of it. This ownership structure often leads to criticism of XRP being a centralized token.
Ripple faced a lawsuit from the U.S. Securities and Exchange Commission (SEC) in 2020 for selling its XRP holdings to raise funds, with allegations of selling unregistered securities. The lawsuit concluded in August this year, with Ripple receiving a relatively low fine, and the court ruling that the publicly traded tokens do not constitute unregistered securities. This ruling prompted several exchanges to relist XRP, and several asset management companies subsequently filed applications for spot XRP Exchange-Traded Funds (ETFs). Among them, the REX-Osprey XRP ETF, structured under the Investment Company Act, has begun trading on the CBOE, aiming to streamline the approval process.
The conclusion of the lawsuit initially boosted market confidence, driving the price of XRP from a low of $0.31 in June 2022 to an all-time high of $3.65 in July this year. However, the upward trend failed to sustain itself. Reasons include delays in the spot ETF approval process due to a potential government shutdown, investors taking profits during the summer, and high U.S. Treasury bond yields diverting capital towards safer assets.
Despite near-term challenges, several potential catalysts exist for an XRP rebound in 2026. The SEC may approve the first batch of spot price ETFs next year, which could help stabilize the price and attract more retail and institutional capital. Simultaneously, the XRP Ledger is launching an Ethereum-compatible sidechain to connect with more smart contracts and decentralized applications, thereby enhancing XRP’s utility as a token. Ripple applied for a U.S. bank charter in July this year; if successful, it could facilitate its transition into a full-fledged digital bank, promote the adoption of XRP as a bridge currency in cross-border transactions, and complement its stablecoin, Ripple USD.
If these positive factors materialize, coupled with the Federal Reserve continuing to cut interest rates and Treasury yields eventually declining, XRP could achieve a rebound. The XRP price is expected to remain volatile through the end of 2025, but 2026 could present a window for recovery and potentially new highs.
XRP’s core value proposition lies in optimizing cross-border fund transfers. Traditional cross-border remittances often take several days and involve multiple layers of intermediary banks, each adding foreign exchange and processing fees. Ripple’s payment infrastructure aims to handle high volumes of transactions at significantly lower costs. Denominating transactions in XRP can help businesses avoid high fees associated with currency conversion.
However, although XRP’s market capitalization exceeds that of some well-known cryptocurrency companies and neobanks, its valuation might be high. A key point is that banks adopting the Ripple network does not necessarily increase XRP’s usage—institutions might only leverage the speed and cost advantages of its payment network while still settling transactions in fiat currency.
Bitcoin and XRP are fundamentally different types of cryptocurrencies. Bitcoin is viewed as a hedge against market volatility and is often compared to traditional stores of value like gold, possessing high liquidity and almost no direct competitors. XRP, on the other hand, is a more specialized cross-border payment system focused on improving the efficiency of traditional finance. Given the fundamental differences in their underlying use cases, Bitcoin is considered more resilient in the long term. While XRP has development potential within decentralized finance, its overall application scope might be insufficient to support returns comparable to Bitcoin’s, and it faces competition from other cryptocurrencies offering similar solutions. Therefore, the likelihood of XRP becoming the next Bitcoin is low.
