Ripple’s Problems are in America, but its Future is Overseas

XRP - Ripple’s Problems are in America, but its Future is Overseas

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XRP (XRP-USD), better known by the name of its developer (Ripple), continues to be the favorite in the legal war the U.S. Securities and Exchange Commission (SEC) has waged against it since late 2020. Not only that, as my InvestorPlace colleague Alex Sirois wrote April 18, an end to this courtroom saga may be in sight. So, does that mean there’s a big rally ahead for Ripple’s native token? Not necessarily.

Why? To explain, let’s take a look at its price action since the start of this lawsuit. In early-to-mid 2021, XRP-USD staged a stunning comeback, when it first became apparent that the SEC had no case, in its allegations that the sale of this token since its launch in 2013 constituted an unregistered securities offering.

Yet this big run-up happened at the same time as the popularity of cryptocurrencies overall was taking off. Speculators were rushing into coins and tokens, from established ones like Bitcoin (BTC-USD), all the way to “memecoins” like Dogecoin (DOGE-USD). Since its big run-up last spring, Ripple has during this timeframe moved up and down in tandem with the market.

The takeaway? Investors have long since priced-in legal victory against the SEC. In turn, its price movements over the past twelve months have been driven mostly by crypto market sentiment. Although we may see a temporary lift from it being official it’s out of the SEC’s crosshairs, this much-awaited development may not be something that gets it back up above $1 per token. The “risk-off” sentiment for Bitcoin, and crypto in-general, could carry on, as the Federal Reserve keeps making its hawkish pivot.

Having said all this, there may still be a reason to buy XRP. Just not as a short-term trade. More as a long-term bet on growing demand for its intended purpose (cross-border payments). Per recent remarks made by Ripple CEO Brad Garlinghouse, the crypto firm’s U.S. operations remain affected by the legal headwinds. These challenges could keep it at a disadvantage in the U.S. market. Even if it beats the SEC’s case.

But there’s something that could more than make up for it: growing demand overseas. Since early 2021, demand for its RippleNet payments platform has grown eight-fold. That means booming demand for its native token, which is used to facilitate transactions. If international demand keeps rising?

Even if the gains come in a gradual pace, it may be worthwhile to consider XRP as a long-term investment, due to a catalyst related to its main use case, not from the Ripple vs. SEC verdict.

On the date of publication, Thomas Niel held a long position in BTC-USD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.


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