Here's Why XRP Could Be About to Soar

Key Points

• A Fed rate cut could lead to more interest in cryptocurrencies, XRP included.

• The SEC is planning to decide on XRP ETFs in October.

• Ripple, the company behind XRP, has partnered with more than 300 financial institutions that use its payment network.

• 10 stocks we like better than XRP ›

Once the hottest cryptocurrency in the world, XRP (CRYPTO: XRP) has seen its momentum grind to a halt. Its price dropped about 7% last month, and it has been below $3 for more than a week. XRP isn't in dire straits, but investors are wondering whether to stick around or start selling.

Even though XRP has been up and down recently, it could close out the year well, and it still has plenty of long-term growth potential. Here's a look at possible growth catalysts during the rest of 2025 and what makes it a compelling crypto investment.

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Image source: Getty Images.

Lower rates could drive more money to crypto

The Federal Reserve is meeting three more times this year, on Sept. 16-17, Oct. 28-29, and Dec. 9-10. There's a high probability of a rate cut at the September meeting, and we may see multiple rate cuts by the end of the year.

Lower interest rates tend to be beneficial for cryptocurrencies and other higher risk assets. When rates are high, U.S. Treasuries and other safe assets are more popular, since they offer a reasonable and nearly risk-free return. As rates drop and those returns get smaller, safe assets are a less attractive investment.

There are a few caveats here. There's still a chance, albeit a small one, that the Fed holds interest rates where they are. If it cuts rates, that's not guaranteed to raise cryptocurrency prices. And even if it does, it would be for many cryptocurrencies, not just XRP.

Still, the most likely scenario is that interest rates come down. As one of the most popular cryptocurrencies, XRP would be well positioned to benefit from that news.

An XRP ETF decision in October

The Securities and Exchange Commission (SEC) approved the first spot crypto exchange-traded funds (ETFs) for Bitcoin and Ethereum last year. It's currently reviewing applications for XRP ETFs and plans to rule on those in October. Polymarket has the approval odds this year at 95% (as of Sept. 5).

ETF approval is the biggest reason I think XRP will do well in the coming months. If those funds get SEC approval, they will need to start buying XRP to support their ETFs. In addition, ETF approval would likely attract more retail investors, particularly those who see it as a sign of the cryptocurrency's legitimacy.

JPMorgan Chase has estimated that XRP ETFs could see inflows of $4 billion to $8 billion within the first year. But it made this projection at the start of 2025 based on the performance of Bitcoin and Ethereum ETFs. Ethereum ETF inflows picked up significantly during the last two months, to $5.4 billion in July and $3.9 billion in August, so JPMorgan's estimate could end up being on the low side. Canary Capital Chief Executive Officer Steve McClurg thinks that XRP ETF inflows may reach $5 billion -- within the first month.

XRP's success depends on Ripple

Rate cuts and ETF approval are potential short- and medium-term growth catalysts for XRP. Long-term growth is tied to Ripple's payments network and XRP's role in it.

Ripple developed XRP and its blockchain, the XRP Ledger (XRPL), to make cross-border payments more affordable and faster. Its payments network, RippleNet, is built on XRPL and uses blockchain technology to settle transactions in three to five seconds. This is a huge improvement for international payments, which can take several business days to complete with the widely used SWIFT system.

More than 11,500 financial institutions use SWIFT, compared to more than 300 that use RippleNet. And many of the banks that use RippleNet do so without using XRP, which serves as a bridge currency when needed and also to pay transaction fees on the XRPL.

Those numbers don't look great for Ripple, but in fairness, financial companies wouldn't change their payment systems overnight. To Ripple's credit, it has partnerships with several big banks, including Bank of America, American Express, and Banco Santander. Although it's still in the early stages, it has clearly drawn interest from financial institutions. If it's able to keep expanding its partnerships during the next few years, XRP will likely continue to be one of the most successful cryptocurrencies.

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Bank of America is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Lyle Daly has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin, Ethereum, JPMorgan Chase, and XRP. The Motley Fool has a disclosure policy.