Prediction: The Cryptocurrency XRP Will Be Worth Less Than $1 in 5 Years

I'm not going to beat around the bush: I think the cryptocurrency XRP (CRYPTO: XRP) will be trading below $1 five years from now. Here's why.

XRP's biggest catalysts have already come and gone

First, let's consider what's already happened recently. Huge catalysts that XRP bulls argued would send the token soaring have come and gone, and the token is back to where it started. There were gains, to be sure, but they were short-lived.

The SEC dropped its long-running lawsuit against Ripple, the company behind XRP, removing what many believed was the single biggest overhang on the token. Then, spot XRP exchange-traded funds (ETFs) like the Canary Capital Spot XRP ETF launched -- seven of them.

These greatly expanded access for institutional and retail investors alike and after an initial surge to $1.6 billion of total investment, they're back to around $1 billion, and XRP is back to around $1.30, down more than 60% from its high in July and well below the more than $2 the token was trading at before the SEC dropped its suit.

The bank adoption thesis isn't playing out

Bulls have always pointed to one main source of real demand for XRP: banks using it to send money across borders. Ripple's technology converts one currency into XRP -- the bridge asset -- then into the destination currency. As banks adopt the technology, XRP demand increases, and the price rises.

That hasn't really borne out, however. It's just not enough demand pressure compared to the investment from crypto speculators.

Adoption of Ripple's platform continues to grow, even as XRP declines. This disconnect has seemed to accelerate in the last year -- and there's a good reason.

Ripple's stablecoin is undercutting XRP

What demand pressure exists from cross-border payments is being eroded because banks now have a much more attractive asset to use as the bridge: Ripple's own stablecoin, RLUSD.

Image source: Getty Images.

A stablecoin is a cryptocurrency designed to always be worth exactly $1. The key is in the name. Banks like stability and are wary of assets like XRP that can swing wildly in value in short amounts of time.

The bottom line

Ripple is building a thriving payments business, and five years from now, I believe it will have continued to grow its footprint within the industry. But I don't see that success translating to XRP's success. There will be ups and downs to be sure, but I think XRP will end up below $1, miles away from the lofty price targets that exist for the banking token.

Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends XRP. The Motley Fool has a disclosure policy.