I’m not going to beat around the bush: I think cryptocurrency XRP (CRYPT: XRP) will be trading below $1 within five years. Here’s why.
First, let’s consider what has already happened recently. Huge catalysts that XRP bulls believe would cause the token to skyrocket have come and gone, and the token is back to where it started. There was certainly progress, but it was short-lived.
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The SEC dropped its long-running lawsuit against Ripple, the company behind XRP, eliminating what many believed was the token’s biggest glut. Next, consider XRP exchange-traded funds (ETFs) like the Canary Capital Spot XRP ETF released: seven of them.
This greatly expanded access for institutional and retail investors alike, and after an initial surge to $1.6 billion in total investment, they are back to around $1 billion, and
Bulls have always pointed to one main source of real demand for XRP: the banks that use it to send money across borders. Ripple’s technology converts a coin into XRP (the bridge asset) and then into the target currency. As banks adopt the technology, demand for XRP increases and the price rises.
However, that hasn’t actually been confirmed. There is simply not enough demand pressure compared to the investment of crypto speculators.
Adoption of the Ripple platform continues to grow, even as XRP declines. This disconnect seemed to accelerate in the last year, and there’s good reason.
The demand pressure that exists for cross-border payments is eroding because banks now have a much more attractive asset to use as a bridge: Ripple’s own stablecoin. RLUSD.
A stablecoin is a cryptocurrency designed to always be worth exactly $1. The key is in the name. Banks like stability and are wary of assets like XRP, whose value can fluctuate wildly over short periods of time.
Ripple is building a thriving payments business and, within five years, I believe it will have continued to grow its presence within the industry. But I don’t see that success translating into the success of XRP. There will certainly be ups and downs, but I believe XRP will end up below $1, miles away from the lofty price targets that exist for the banking token.