Could Buying XRP Today Set You Up For Life?

In the crypto market, hope springs eternal. Even with top cryptocurrencies down anywhere from 30% to 55% for the year, investors continue to cling to the hope that one of them will become a future millionaire-maker.

For example, consider XRP (CRYPTO: XRP). For more than a decade, XRP has enticed investors with the prospect of being able to set them up for life. Given that XRP currently trades for the bargain-basement price of just $1, plenty of investors are willing to take the risk, but is it worth it?

XRP's upside potential

As a general rule of thumb, a cryptocurrency must be able to deliver 1,000x returns to have any realistic chance of becoming a millionaire-maker. That's what is required to turn a relatively modest $1,000 altcoin investment into $1 million.

If you're willing to put up more money, of course, the math becomes a bit more forgiving. Let's say you have $10,000 lying around that has been specifically earmarked for risky, speculative crypto plays. You would only need XRP to deliver 100x returns and hit a price of $100.

But does XRP really have the potential to deliver these types of returns? After all, in more than a decade of trading, XRP has never traded higher than $3.84, and that was in January 2018. Last summer, XRP briefly hit a price of $3.65, but it has since given back nearly all of its gains. So it's hard to see how XRP is going to hit a price of $100 or $1,000 anytime soon.

Image source: Getty Images.

Nonetheless, it's possible to find predictions that XRP will soar in value to new stratospheric levels. Just keep in mind: These price targets are usually based on very bold assertions about future changes to the modern global financial system.

For example, one prediction that was fashionable 12 months ago was that the XRP blockchain ledger would eventually replace the SWIFT payment network for cross-border payments. That's the type of bold catalyst required to deliver 100x or 1,000x gains.

Re-thinking the chances for XRP to hit $100

That's not to say that XRP does not have millionaire-maker potential. But you may need to adopt some very risky strategies to make it happen. For example, in the perpetual futures market, it's possible to take on 3.8x leverage when trading XRP. That type of leverage is fun on the way up (turning every 1% increase in price into a 3.8% gain), but it can absolutely wreck a portfolio on the way down.

Keep your expectations for XRP in check. A $1 crypto soaring to $100 or $1,000 is probably out of the question. Instead, a doubling or tripling in value is far more likely for XRP. That's nothing to complain about, but alas, it won't make you a millionaire.

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