XRP Dropped Below $1 For the First Time Since 2024. But I'm Still Avoiding XRP Right Now.

XRP (CRYPTO: XRP) briefly dipped below $1 on Aug. 11. The token hadn't dropped to that price since late 2024. But over the following two weeks, it bounced back to around $1.40.

That was a nice short-term gain, but XRP is still down more than 50% over the past 12 months. Let's see why it sank earlier this month, why it recovered, and why it's still not worth buying.

Image source: Getty Images.

What happened to XRP?

XRP was created by the founders of Ripple, a fintech company that specializes in blockchain-based payments. Ripple processes many of its transactions on the XRP Ledger and uses the XRP token as a bridge currency to accelerate fiat transactions.

But in 2020, the Securities and Exchange Commission (SEC) sued Ripple for selling some of its own XRP tokens to fund its expansion. That lawsuit, which alleged that Ripple sold XRP as an unregistered security, drove the top cryptocurrency exchanges to delist the token.

But last year, that lawsuit finally concluded with a lighter-than-expected fine for Ripple and a ruling that XRP wasn't a security when sold to retail investors. XRP subsequently returned to the top crypto exchanges, and the SEC approved its first spot price ETFs in late 2025.

A growing number of financial institutions, especially in Japan, have also begun using XRP as a cheaper, faster alternative for cross-border remittances. All those catalysts, along with expectations for more interest rate cuts, drove XRP's price as high as $3.66 last July.

However, several fierce headwinds ended that rally. First, market expectations for rate cuts shifted to rate hikes as inflation heated up again. That shift chilled the crypto market and drove investors toward more conservative investments. Second, more financial institutions adopted stablecoins -- which were pegged to a fiat currency such as the U.S. dollar -- rather than XRP to process their blockchain-based transactions. Lastly, the CLARITY Act -- which would explicitly define XRP as a digital commodity rather than a security -- stayed in limbo in the U.S. Senate. The passage of the CLARITY Act could have driven more institutional investors to buy XRP.

Why I'm still avoiding XRP

XRP overcame some of its biggest challenges last year, but it's not out of the woods yet. Stablecoins could significantly reduce XRP's usefulness as a bridge currency for fiat transactions, and interest rate hikes could further chill the crypto market. Without any clear catalysts on the horizon, XRP could continue to struggle -- even as concerns about the national debt drive some investors back to Bitcoin and Ether.

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.