XRP Is Crashing, but Here's Why It Could Get Back to Over $2 This Year
Key Points
XRP's value has been declining this year, right along with Bitcoin.
However, cryptocurrencies could rally if interest rates come down.
The new Fed chair could cut rates as early as June.
- 10 stocks we like better than XRP ›
When XRP (CRYPTO: XRP) rallied in late 2024, there was a lot of excitement that wide-scale crypto reform would make the cryptocurrency a hot investment under President Donald Trump. And while there has been some crypto reform, it's been a bit underwhelming. Although XRP hasn't given back all of the gains it accumulated after Trump's election win, the digital currency has been nosediving for the past several months.
On Tuesday, it was trading around $1.50 -- down nearly 60% from its 52-week high of $3.65. Things have looked bleak for XRP of late. However, there may be a catalyst coming soon. Here's why I think the cryptocurrency could end up rising back to over $2 later this year.
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Rate cuts could spark a rally
It's no secret that President Trump hasn't been happy with Fed chair Jerome Powell not cutting interest rates fast enough in order to help the economy. Recently, Trump nominated Kevin Warsh to lead the Federal Reserve later this year, as Powell's term ends in May. Warsh may be much more likely to cut rates, even if economic conditions aren't necessarily ideal.
While the economic picture is a complicated one right now due to the ongoing war in Iran and rising oil prices impacting inflation, economists still expect rates to come down in June -- after Powell's term is set to end. There may even be multiple cuts this year. And for speculative investments, including cryptocurrencies such as XRP, that could lead to a rally.
XRP is risky, but it may have room to rise a lot higher
So far this year, XRP has fallen by 18%, which is only slightly worse than Bitcoin's 16% decline. The good news is that XRP's struggles aren't due to its own problems and instead stem from softness in the broader crypto market. And as crypto investors become more bullish, potentially due to rate cuts, there may be a rise in both the price of Bitcoin and XRP later this year.
With XRP falling sharply in recent months, there may be plenty of room for it to rally higher. XRP is still one of the top cryptocurrencies in the world, with a market cap of $92 billion, and it may be overdue for a recovery. While it's not a suitable option for all types of investors, given the risk and volatility it entails, the cryptocurrency could be a good buy given its low valuation and the possibility of multiple rate cuts later this year.
Should you buy stock in XRP right now?
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and XRP. The Motley Fool has a disclosure policy.
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