Here's Why I'm Strongly Considering Selling XRP

I bought XRP (CRYPTO: XRP) via the Canary XRP ETF (NASDAQ: XRPC) on the bet that the coin's calendar of catalysts would power its returns over the next few years. The hope was that exchange-traded funds (ETFs) would arrive and draw in capital, while Ripple would forge collaborations with financial businesses to increase ledger use, and tokenized assets would pile onto the XRP Ledger (XRPL) for management. All three of those things happened, and the coin is down 47% in the last 12 months.

The ever-widening gap between the asset's fundamentals and its price has forced me to think that if everything is going right for XRP and its price still isn't going up, maybe the problem isn't the catalysts. Maybe it's the design of the asset itself. A bit of digging confirmed that hunch, and now I'm strongly considering selling XRP. Here's why.

Image source: Getty Images.

The catalysts have been delivered, to no effect

Five spot XRP ETFs are now trading in the U.S. Cumulative net capital inflows into those ETFs were $1.4 billion as of June 5. None of that integration between the traditional financial system and the XRPL has translated into a sustained price move.

Similarly, the XRPL hosts roughly $384 million in tradeable tokenized assets, up from $118 million 12 months ago. All that capital onboarding to the network didn't arrest the fall of the coin's price.

What's more, as of early May of this year, JPMorgan Chase, a veritable titan of the global financial system, is piloting tokenized Treasuries on the chain. Its commercial and investment bank has more than $40 trillion in assets under custody, so the idea that the XRPL was being evaluated to manage even a fraction of that value should have been enormously bullish -- and XRP still didn't budge to the upside.

XRP doesn't compensate holders either

There is an even bigger problem. Holders of XRP have no way of capturing the value of those catalysts happening if they don't drive the coin's price upward.

Consider how value is supposed to accrue here.

Each XRPL transaction burns a tiny transaction fee, which, in theory, makes all of the remaining tokens worth slightly more due to the activity on the network. But the quantity of XRP burned daily typically runs in the hundreds of XRP against the more than 61.9 billion XRP in circulation, with about 0.02% of the total supply burned since the chain's launch.

There is no staking yield, and Ripple does not buy back the token. In a case like this, the coin's value reduces to one mechanism: more people wanting the coin than selling it. That hasn't been the case for a while.

If, like me, you have started to suspect that the design of this coin does not pass holder value through, selling it starts to look very reasonable. I haven't sold yet, but I am closer than I have ever been.

JPMorgan Chase is an advertising partner of Motley Fool Money. Alex Carchidi has positions in Canary Xrp ETF. The Motley Fool has positions in and recommends JPMorgan Chase and XRP. The Motley Fool has a disclosure policy.