Could Buying XRP Today Set You Up for Life?

One of the more tantalizing major cryptocurrencies right now is XRP (CRYPTO: XRP), which has already displayed its dramatic upside potential. In the months after the presidential election last year, XRP skyrocketed more than 400% and appeared to be on its way to hitting a new all-time high above $4.

However, XRP has run into some rough patches since then, and now trades for a bargain price of just $2.50. But hope springs eternal, and plenty of analysts think XRP is valued nowhere near where it should be. If they are right and it eventually gets to where they think it should be, loading up on XRP now could set you up for life.

Possible inflows

A big reason for optimism is the imminent launch of new spot XRP exchange-traded funds. A handful of top investment firms have already submitted applications to the Securities and Exchange Commission (SEC), and it now looks increasingly likely that new ETFs allowing investors to buy into XRP will be trading by the end of the year.

The government shutdown ruined any chance of ETF approvals in October, but there's still hope that approving them will be one of the first orders of business for the SEC in November. The SEC has adopted a decidedly pro-crypto approach under the Trump administration, and has already approved one ETF that tracks the price of XRP.

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In a best-case scenario, billions of dollars will soon flow into XRP, helping to push up its price. Earlier in the year, the expectation was that these new spot ETFs might attract anywhere from $4 billion to $8 billion from investors. Some analysts have even suggested that XRP might soar as high as $25.

That would be nice, but it's still not enough to fit any standard definition of "life-changing wealth." Twenty-five dollars would be a tenfold return on investment, given XRP's current price of $2.50. But it would just means that $1,000 invested today will be worth $10,000 in the future. That's not enough to set you up for life.

Any major catalysts for XRP?

Quite frankly, what XRP needs is a mega-catalyst capable of delivering 100x or even 1,000x upside. The good news here is that several of these mega-catalysts have already been bandied about by crypto investors.

According to one scenario, the XRP blockchain will become the primary way that banks and other financial institutions make cross-border payments. And indeed, at least 20 financial institutions now use XRP as a way to make fast, cheap cross-border payments. If the pace of institutional adoption picks up, demand for the XRP token will rise as well.

In another scenario, XRP could become the preeminent blockchain for real-world asset (RWA) tokenization. This refers to the process of transforming traditional financial assets into digital assets that can be traded and managed on a blockchain. Asset tokenization introduces all sorts of market efficiencies, and has been touted as one of the next big financial trends for Wall Street. So if XRP gets in front of this trend, it could be huge.

Either of these catalysts might be enough to deliver the type of 100x upside needed for life-changing wealth. But this is where things get very frustrating with XRP. If you actually look at the blockchain metrics, the numbers don't back up all the hype. In terms of Total Value Locked (TVL), for example, XRP ranks just 48th among major blockchains. Put another way, money may be flowing through the XRP blockchain, but it's not staying there.

Temper your expectations for XRP

Ultimately, XRP is really just a bridge currency used to swap into and out of different currencies. From this perspective, XRP's overall utility can easily be replaced by stablecoins, which are digital currencies pegged 1:1 to the U.S. dollar. Stablecoins could replace XRP as a superior way to send money across borders, thereby eroding any possible utility XRP might have.

Also, keep in mind: In more than a decade of trading, the all-time high for XRP is just $3.84. So, despite the relentless hype and speculation about XRP and Ripple (the company behind the XRP token), the upside potential might not be nearly as high as some people think. XRP might only be able to double in value, if that.

For that reason, it's hard to see how investing in XRP could set you up for life. Admittedly, XRP has a compelling future growth narrative and it might one day reach a price of $25 or higher. It could be a solid addition to a diversified crypto portfolio. But I'm looking elsewhere for a cryptocurrency that can deliver truly life-changing wealth.

Dominic Basulto has positions in XRP. The Motley Fool has positions in and recommends XRP. The Motley Fool has a disclosure policy.