The Real Reason XRP Keeps Bouncing Back -- and What Comes Next

The bearish case against XRP (CRYPTO: XRP), the native token of the XRP Ledger, is arguably getting stronger. The token was primarily used as a bridge currency for fiat transactions on Ripple's blockchain-based payment platform. Still, Ripple's new stablecoin -- Ripple USD (CRYPTO: RLUSD) -- can achieve the same thing with a lot less volatility.

XRP also isn't valued by its scarcity in the same way as Bitcoin, since its developers minted the entire supply of 100 billion tokens before its market debut. Its ledger also doesn't natively support smart contracts, which are used to develop decentralized apps, so it can't be considered a developer-oriented token like Ethereum.

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Moreover, XRP lacks any clear catalysts following the conclusion of the SEC's lawsuit against Ripple, which dragged on from 2020 to 2025. The SEC had sued Ripple, whose founders created XRP, for selling their own XRP holdings to fund the company's expansion.

That lawsuit, which drove the top crypto exchanges to delist XRP, caused XRP's price to drop below $1 throughout most of 2022 and 2024. But in 2025, it bounced back and briefly rallied above $3 after that lawsuit ended with a lighter-than-expected fine for Ripple. The crypto exchanges relisted XRP, and the SEC even approved its first spot price ETFs. But after those temporary tailwinds dissipated, it pulled back to about $1 as the crypto market cooled off.

But why isn't XRP dropping below $1 again?

Nevertheless, XRP has consistently stayed above $1 this year. It keeps bouncing back because the bulls believe Tier-1 banks or major payment networks will eventually use XRP to settle large fiat transactions faster and more cheaply than conventional SWIFT transfers.

XRP has already launched a few pilot programs and partnerships with Asian banks in Japan and Southeast Asia. In Japan, XRP's largest national market, a pilot program found that cross-border XRP transactions cost 60% less than SWIFT transfers.

SBI Remit, the international transfer arm of Japan's SBI Holdings, has already used Ripple's On-Demand Liquidity service -- which uses XRP as a bridge currency -- to settle more than $15 billion in transactions. Therefore, XRP could still have a bright future in countries that don't use the U.S. dollar (and dollar-pegged stablecoins) to settle their fiat transactions.

So while XRP's investors will likely admit that stablecoins like Ripple USD will cannibalize some of their dollar-based transactions, they don't perceive it as a zero-sum game. That's why XRP keeps bouncing back -- and why it won't simply fizzle out over the next few years.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and XRP. The Motley Fool has a disclosure policy.