Can Cryptocurrency XRP (Ripple) Reach $3 Again?

This has already been a roller coaster year for investors. After hovering at or near historic highs in February, the iconic Dow Jones Industrial Average and S&P 500 indexes both plunged more than 16% by early April before rebounding more than 13% in a month. The whiplash was even more severe for the tech-heavy Nasdaq Composite, which dropped 23% and then gained 25% over the same period.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Crypto markets followed suit. Bitcoin reached an all-time high in January before plunging nearly 30%, only to recover, rising nearly 50% and setting a new all-time high of more than $111,000 as of May 23.

At the same time, the crypto token XRP (CRYPTO: XRP) began the year at its highest point since 2018 before plummeting nearly 50%. Although it has recovered somewhat, unlike Bitcoin and many other cryptos, XRP is still far from its recent peak, currently hovering at about $2.40.

So will Bitcoin's momentum spill over to XRP? Can XRP top $3 once again?

XRP is legit

The cryptocurrency market is full of projects ranging from frivolous to outright fraudulent. While the Bitcoins and Ethereums of the world are legitimate digital assets with real-world use cases, track records of security, and widespread adoption, there is a swath of meme coins that exist as purely speculative instruments, attracting those looking to get rich quickly.

XRP definitely falls into the former camp. The token, which was created by the company Ripple Labs, is designed to make transactions between financial institutions -- especially transactions that cross borders -- faster and cheaper.

Ripple Labs has partnerships with major financial institutions like Bank of America and JPMorgan Chase. It's clear that the technology works and is secure; otherwise such institutions would not touch it.

Image source: Getty Images.

Understanding a key distinction

There's a catch here, and it's an important one for those who want to understand XRP's real value. Many investors fail to understand that a bank partnering with Ripple Labs does not necessarily hold or use XRP itself.

Ripple Labs offers two primary products: On-Demand Liquidity (ODL) and RippleNet. The important difference is that while ODL makes use of XRP and its blockchain, RippleNet does not. If an institution wants to use ODL, it must hold XRP. That's not the case for RippleNet.

The most common argument I hear for XRP's value is that as adoption grows, more and more banks will need to buy and hold more and more XRP. That will mean less XRP in circulation, and by the law of simple supply and demand, XRP's price will go up.

Here's the thing: Most of these banks, especially the major ones, don't have a need for ODL (it's more useful for institutions that face liquidity hurdles, like fintechs focused on remittance) and use RippleNet alone. That means they are not buying XRP and putting upward pressure on its price. The primary argument just doesn't hold up in the real world.

XRP faces rising competition

OK, but at least XRP is in use by institutions using ODL, right? That's true, but XRP is facing increased competition from stablecoins. Most of the advantages XRP provides over traditional systems can be replicated by a system that uses stablecoins instead of XRP. These coins offer one major advantage over XRP: They don't fluctuate wildly in price. A bank is taking on significant risk if it buys up a bunch of XRP in order to use ODL and XRP's price suddenly drops 10% the next day -- something crypto investors know is a distinct possibility.

A network that uses stablecoins avoids this rather large threat. It's why many banks, as well as governments around the world, are looking to create stablecoins of their own.

The path to $3.00

In a sea of meme coins and scams, XRP is a legitimate crypto token based on significant adoption and a real-world use case. It seems to me, however, that investors are overlooking a fundamental distinction -- the difference between RippleNet and ODL -- that undermines XRP's most compelling argument for long-term price appreciation.

Can XRP reach $3 again? Absolutely. I'm afraid, though, that this achievement would be driven by hype and euphoria in the crypto market rather than practicality. I think that over time, investors will realize that the story of widespread adoption by the banking industry just isn't playing out, and its price will fall significantly. We are interested in long-term investments here, not short-term plays. I would avoid XRP altogether.

Should you invest $1,000 in XRP right now?

Before you buy stock in XRP, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and XRP wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $639,271!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $804,688!*

Now, it’s worth noting Stock Advisor’s total average return is 957% — a market-crushing outperformance compared to 167% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of May 19, 2025

Bank of America is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America, Bitcoin, Ethereum, JPMorgan Chase, and XRP. The Motley Fool has a disclosure policy.