3 Reasons to Watch XRP in 2026

The cryptocurrency market's performance was disappointing last year. And that's surprising considering all the positive regulatory changes from the Trump administration and the Securities and Exchange Commission (SEC) that are meant to push the asset class further into the mainstream. XRP (CRYPTO: XRP) didn't buck the negative trend, with prices down 21% in 2025.

And while chart-reading is not a reliable way to analyze financial assets, patterns often repeat. And there are growing concerns that this utility-focused cryptocurrency could be in for the same long-term slump that it experienced after its previous peak in 2021. But there are three reasons this scenario seems less likely to happen this time around.

The macroeconomic situation is favorable

The chart of XRP's most recent rally looks very similar to the post-COVID rally (and subsequent crash) that it experienced in mid-2021. But the underlying macroeconomic conditions couldn't be more different. Back then, the global economy was in recovery, with governments around the world lowering interest rates and flooding capital into the system to stimulate growth.

According to CoinLedger, which provides software for crypto tax reporting, lower interest rates generally mean higher prices for cryptocurrencies because they boost liquidity in financial markets and increase investor appetite for riskier assets relative to risk-free assets like Treasury bonds. In 2022, the Federal Reserve began one of its most aggressive tightening cycles in history, which contributed to the underperformance of assets sensitive to interest rates.

Now, however, the situation is different. Instead of raising rates, the Fed is reducing them, with analysts at Goldman Sachs predicting two more cuts in 2026, bringing the level to about 3% to 3.25%. Although investors shouldn't expect the cryptocurrency market to boom as much as it did when rates were near zero in 2021, the lower cost of capital could have a very beneficial impact on prices in the new year and beyond.

XRP has a compelling brand

Unlike stocks or bonds, cryptocurrencies aren't attached to real-world businesses that can be analyzed based on fundamental metrics like profit or revenue growth. But over time, some outperform others because of their brand, which involves factors like trust and perceived seriousness.

And unlike meme coins, which have no true uses, XRP was created with the goal of real-world utility. It aimed to become the crypto of choice for the international payments industry, letting users easily transfer money between different currencies using XRP as a bridge. It set itself apart with an ultra-low transaction fee of just 0.00001 XRP, which is a fraction of $0.01.

Although other newer blockchains have exceeded XRP's network on raw technical merits like transaction speed or the ability to host complex decentralized applications (dApps), it was one of the first cryptocurrencies to get serious about real-world performance, which has left a lasting impact on its brand image and valuation. These intangible factors help explain why the token is the fifth-largest cryptocurrency in the world, with a market capitalization of $112 billion.

Image source: Getty Images.

XRP has a strong development team

Blockchain projects usually pride themselves on their decentralization, but sometimes a level of top-down influence can be beneficial. In XRP's case, the platform's developer, Ripple Labs, has helped bring it into the mainstream. The team recently won a partial victory in an SEC lawsuit establishing that coin sales to retail investors did not fall under securities law, helping clear up regulatory uncertainty.

Ripple Labs is also boosting the XRP ecosystem with new projects, such as the stablecoin Ripple USD. While this is a separate token from XRP, it uses the same blockchain ledger, boosting total transaction volume and fees.

Ripple Labs has taken its mainstream push a step further by applying for a U.S. bank charter. If granted, this will give XRP additional legitimacy, making it more attractive to large institutional investors like pension funds, endowments, and insurance companies. XRP investors have a lot to be excited about in 2026 and beyond.

Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Goldman Sachs Group, and XRP. The Motley Fool has a disclosure policy.