Can XRP Hit $4 By October?

Key Points

• Regulatory uncertainty continues to cap XRP's potential upside.

• The SEC had the opportunity to approve new spot XRP ETFs in August, but delayed a decision until October.

• Although institutional adoption of XRP is growing, questions remain about the pace and timing.

• 10 stocks we like better than XRP ›

In mid-July, XRP (CRYPTO: XRP) looked like an obvious, slam-dunk candidate to hit $4 this year. At the time, XRP was trading at a 52-week high of $3.65.

But a lot can happen quickly in the crypto market, and XRP has slid all the way back down to less than $3. So what are the realistic chances of XRP hitting $4 by October?

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Regulatory environment

Right now, there are several key factors affecting the price of XRP. The most important of these is the overall regulatory environment for XRP. Earlier in August, Ripple, the company behind the XRP crypto token, settled its long-standing litigation with the Securities and Exchange Commission (SEC). Combined with the overall pro-crypto approach of the Trump administration, that seemed to indicate much greater regulatory clarity for both Ripple and XRP.

Obviously, regulatory clarity is very bullish, because it implies that many of the crypto and blockchain initiatives that stalled out during the past few years can be restarted, and Ripple can get back to business. It also suggests that future moves -- such as the launch of new spot ETFs -- would likely receive approval by the SEC.

But, surprisingly, that hasn't been the case. In mid-August, the SEC had the opportunity to approve a handful of spot XRP ETFs, but punted on the opportunity. The deadline for potential approval has been pushed back to mid-October. If these ETFs are approved, I would feel much more confident about XRP's ability to hit the $4 mark.

Institutional adoption

Another key factor is institutional adoption. In other words, are financial institutions partnering with Ripple on new projects involving the XRP-powered Ripple payment network? And, at the same time, are institutional investors making XRP a key part of their portfolios? This is where things get dicey, because the reality rarely lives up to the hype, buzz, and speculation.

For example, let's consider whether financial institutions are partnering with Ripple on new projects. Yes, Ripple has definitely partnered with some high-profile names, and BlackRock (NYSE: BLK) could decide to use the XRP blockchain for new asset tokenization initiatives. Moreover, Ripple recently acquired the Rail stablecoin payment platform for $200 million.

But if you look at the underlying data for decentralized finance (DeFi), XRP barely registers as a blip on the radar. Among all major blockchains, XRP ranks 48th in total value locked (TVL), according to the latest data from DeFiLlama. Right now, there's a huge mismatch between the valuation of XRP ($170 billion) and the amount of total blockchain activity, as measured by TVL ($100 million).

The same phenomenon is at work when you consider institutional adoption from the perspective of institutional investors making XRP a key part of their portfolios. There's a lot of buzz and hype about the new spot ETFs, but if you take a look at current funds flow data, XRP barely registers as a crypto that institutional investors are buying in size.

According to the latest data from CoinShares from August, institutional investors are allocating 77% of their money to Ethereum (CRYPTO: ETH), and another 15% to Bitcoin (CRYPTO: BTC). That leaves just a tiny sliver for XRP, which comes in at a paltry 3%. Even Solana (CRYPTO: SOL) is getting more money from institutional investors than XRP these days.

What do the prediction markets say?

Online prediction markets can give a good sense of what traders are thinking at any point in time, given that these traders are putting real dollars to work with their predictions. Right now, the Kalshi prediction market is giving XRP a 47% chance of hitting $3.75 this year; a 39% chance of hitting $4 this year; and a 17% chance of hitting $5 this year.

Just keep in mind -- these are probabilities for the full-year time period. Yes, XRP may have a 39% chance of hitting $4 in 2025, but what about in the next 30 days? In that case, the probability is significantly lower. There's just less runway to work with. For XRP to soar to a new all-time high of $4 by October, it will likely take another short-term catalyst.

The good news is that there might be one in the offing. The Federal Reserve recently hinted that rate cuts could be coming soon, and if they do, they might just be enough to push XRP over the $4 mark. Crypto markets typically rally on news of impending Fed rate cuts, and this could be exactly what XRP needs to push still higher.

If you're willing to accept the inherent volatility of crypto, then XRP could be the sort of high upside crypto capable of boosting the overall returns of your portfolio.

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Dominic Basulto has positions in Bitcoin, Ethereum, Solana, and XRP. The Motley Fool has positions in and recommends Bitcoin, Ethereum, Solana, and XRP. The Motley Fool has a disclosure policy.