Ripple (XRP-USD) didn’t have a great start this year. In January, Grayscale Investments began the dissolution of XRP Trust.
Grayscale cited a Ripple Securities and Exchange suit as the reason. In the months that followed Greycale’s announcement, the value of Bitcoin (CCC:BTC-USD) soared and never looked back.
With Coinbase going public next, the cryptocurrency market has never been brighter. Investors should not let go of XRP yet. Whether Ripple wins or settles, there’s a lot going on with XRP that make it worth having.
Tesla’s (NASDAQ:TSLA) investment in bitcoin only lifted the cryptocurrency euphoria that seems to have taken permanent hold of the markets.
Later this month, Coinbase will become a publicly-traded company. Instead of an initial public offering, Coinbase will pursue a direct listing.
By cutting out intermediaries and lucrative commissions for financial institutions, Coinbase will pass its savings to shareholders. This could lead to a sharp rise in Coinbase stock when it starts trading. So, XRP’s value will probably join the ride higher.
Coinbase plans to issue 114.85 million Class A shares at a total price of $943.2 million.
A Closer Look at XRP
Unfortunately, even as the company begins to shake off worries about the SEC suit, not everything has been rosy. For instance, the end of the partnership with money transfer company MoneyGram International (NASDAQ:MGI) is a negative development.
“We are proud of the work we were able to accomplish in a short amount of time, as well as the impact we were able to achieve in bringing this first-of-its-kind product to market,” Ripple said in a statement. “Together, we processed billions of dollars through RippleNet and On-Demand Liquidity (ODL).“
RippleNet is comprised of a network of banks, payment providers and financial institutions. This is the heart of the operations.
In 2019, Ripple invested $50 million in MoneyGram. With the two-year partnership over, MoneyGram will no longer get paid by Ripple to use its ODL services. Since the SEC complaint mentions MoneyGram, Ripple probably benefits from ending the arrangement in the long term.
Still, the company’s RipleNet is stronger than ever.
Ripple is the seventh-largest cryptocurrency. Its value rose considerably from before the SEC lawsuit. That could change quickly. Legal issues may change the landscape of the industry.
Ripple allegedly raised $1.3 billion in unregistered securities offerings since 2013. Whether it is a security or a currency is at the heart of the SEC’s lawsuit.
Ripple’s team will need to defend itself in court. Any negative decisions against it will dramatically (if temporarily) hurt the value of XRP.
Ripple bottomed at around 0.20 in January. It rallied in the last two months, trading around $1.30 today. The market is betting that the cryptocurrency will survive. More importantly, speculators think that Ripple will either settle with the SEC or win the case and that either is a positive.
Fair Value and Your XRP Takeaway
Many exchanges and trading platforms like Coinbase and eToro suspended Ripple trading. Investors could avoid the uncertainty around Ripple by investing in the former two exchanges instead.
Since Bitcoin hovered in the $58,000 – $60,000 range recently, crypto investors may prefer Ethereum (CCC:ETH-USD) or Ripple as a less expensive alternative. Ripple advertises itself as the preferred choice. On its website, it writes that hundreds of financial institutions choose RipleNet to service payments.
Ripple touts XRP as a cheaper alternative to Bitcoin. Transactions settle in seconds, which is effectively a real-time settlement. Ripple is a payment settling system that is intended for banks and payment networks.
Conversely, Bitcoin needs a proof-of-work algorithm to process the transaction. It is impossible to hack, change, or cheat the system. Since bitcoins cannot be faked, people may trust them and treat them like money.
Digitalcoin predicted that XRP’s value would rise to more than $1.50 by 2027. In 2028, its value will jump to $2.69. Of course, 2028 is nearly a decade away. Anything can change in that time, so speculators are taking a leap of faith by betting on XRP.
Bitcoin and the other cryptocurrencies showed no signs of falling. The SEC’s suit temporarily hurt XRP’s price. A settlement or a win against the regulator would send XRP’s value higher, matching the rise in Bitcoin.
Disclosure: On the date of publication, Chris Lau did not have (either directly or indirectly) any positions in the securities mentioned in this article.