Prediction: XRP (Ripple) Will Surge Past This Price by 2029

Ripple (CRYPTO: XRP) was one of the earliest adopters of the blockchain idea outlined in the Bitcoin (CRYPTO: BTC) whitepaper. But instead of just building a digital currency, the founders sought to use the technology to support faster and cheaper cross-border transactions.

Unfortunately, Ripple faced some major headwinds since its founding, which kept the value of its cryptocurrency, XRP, from keeping up with the soaring prices of Bitcoin. But it got a major boost over the past year with a friendly administration and a positive court ruling. That has sent the price of XRP up roughly 340% since last year's election (as of this writing).

But there are several reasons to think XRP will continue to climb through the end of the decade, and it could surge in price during the next market cycle (which occurs about every four years).

Image source: Getty Images.

Ripple's big overhang has been lifted

Ripple has been battling a lawsuit brought by the SEC since late 2020, when it was accused of selling XRP as an unregistered security. Ultimately, the courts determined that only sales of XRP to institutional investors violated the law and ordered Ripple to pay a $125 million fine and issued a permanent injunction against institutional XRP sales. While both sides filed appeals, they finally withdrew them in August of this year, ending a nearly 5-year overhang that weighed heavily on XRP.

On top of that, the current administration has been quite friendly toward cryptocurrency, providing new laws and regulations that should support its adoption. Congress passed the GENIUS Act, providing a regulatory framework for stablecoins. It also repealed laws barring commercial banks from developing digital asset custody services.

The current SEC is also much friendlier toward crypto. Chairman Paul Atkins wants to develop clear guidelines that determine whether a crypto asset is a security (preventing another years-long case like Ripple's). He also wants to provide a framework for using blockchain technology in financial markets, which could be very beneficial for Ripple and XRP.

The path is clear for institutional adoption

Ripple cannot sell XRP directly to institutions, but institutional investors can still buy the cryptocurrency on the open market. And it's about to get a lot easier. Another friendly SEC policy has been the approval of new exchange-traded funds that track the spot price of cryptocurrencies, including XRP.

The SEC is currently reviewing XRP ETF applications from seven institutions. The first group is expected to launch in mid-November.

Widely available XRP ETFs should fuel adoption among institutional investors looking for exposure to the crypto asset class. The XRP futures contracts launched by CME Group have seen significant trading volume since launching in May, suggesting the demand is there. While XRP doesn't have the same supply-side forces as Bitcoin, the surge in demand should prop up the price of the cryptocurrency.

An asset with real world use cases

The thing that separates XRP from Bitcoin is that Ripple is building financial technology with real world use cases. Its RippleNet aims to take on the SWIFT network for international money transfers. A SWIFT transfer often involves multiple intermediaries for sending payments, which can cause the cost of the transaction to increase while slowing it down. RippleNet uses its own blockchain-based ledger to confirm transactions in seconds.

What's more, RippleNet uses XRP as a bridge currency to convert one currency to another with a feature called On-Demand Liquidity. While a sender doesn't need to hold XRP, there does need to be ample liquidity available from somewhere. If transaction volume on RippleNet increases, the market cap of XRP will necessarily grow to support it. Several financial institutions have already started testing using RippleNet, including Santander, PNC, and American Express.

Other use cases for the XRP ledger exist as well. Real-world asset tokenization, which allows people to easily move asset ownership on the blockchain, could be backed by XRP. Ripple's RLUSD stablecoin transactions settle on the XRP ledger, requiring gas payments in XRP. Ripple is also seeing momentum in its efforts to bring more decentralized finance services to its blockchain.

Ultimately, however, XRP's price is heavily dependent on the adoption and use of RippleNet and On-Demand Liquidity. Combined with growing adoption of XRP as an investment holding, which may not be held on chain (reducing liquidity), the price of XRP should climb considerably during the next market cycle now that the big regulatory overhang is out of the way and the government is actively pushing more blockchain and cryptocurrency adoption.

As a result, it's not unreasonable to expect XRP to climb past $10 by 2029, near the height of the next cryptocurrency market cycle. Granted, that requires broad adoption by both financial institutions and investors, and that's far from guaranteed. But it might be worth taking a chance on XRP, as one of a handful of cryptocurrencies with real traction in building practical blockchain technology. As always, keep your own risk tolerance in mind.

American Express is an advertising partner of Motley Fool Money. Adam Levy has positions in Bitcoin and XRP. The Motley Fool has positions in and recommends Bitcoin and XRP. The Motley Fool recommends CME Group. The Motley Fool has a disclosure policy.