Prediction: XRP (Ripple) Will Be Worth This Much in 5 Years

Cryptocurrencies are volatile at the best of times, but the losses during the past year have been particularly severe. Despite its recent rally, industry leader Bitcoin is still down by 38% from its peak, while at the smaller end of the market, XRP (CRYPTO: XRP) remains 63% below its high.

XRP was created by a company called Ripple in 2012. It serves as the native cryptocurrency for the XRP Ledger, a decentralized blockchain designed to instantaneously settle global payments. XRP is primarily used to bridge fiat currency exchanges, which minimizes costs and speeds up transactions.

However, Ripple went on to build a comprehensive payment platform that now supports a range of alternatives, including stablecoins. This is eating away at XRP's utility, which is a big reason it has lost so much value since last year. In fact, the token recently traded below $1 for the first time since 2024, and history suggests there might be more downside on the way.

Here's where I predict XRP will be in five years.

Image source: Getty Images.

XRP's relevance is slowly fading

Sending money overseas sometimes takes a few days because not every bank uses the same payment infrastructure. Some institutions have adopted the SWIFT (Society for Worldwide Interbank Financial Telecommunication) network, while others operate in countries that developed their own networks, so transacting with one another requires an intermediary. This slows processing times and adds additional fees.

Ripple Payments serves as a line of communication between banks no matter what existing infrastructure they use, allowing them to settle transactions directly and instantly. As a bridge currency, XRP can standardize those transfers; for example, a U.S. bank sending money to an Italian bank through Ripple Payments might have its U.S. dollars converted into XRP tokens, which are then converted into euros at the receiving bank.

This entire process is completed in seconds versus days, and it can cost as little as 0.00001 XRP tokens, which is equivalent to a fraction of one U.S. cent. But despite the obvious benefits, not every bank will use XRP because of its extreme volatility. As I touched on earlier, the token has declined by 63% since its high last year, so banks could be exposed to steep losses during extended holding periods.

Ripple launched a U.S. dollar-backed stablecoin called Ripple USD (CRYPTO: USD) in late 2024 to address this problem. Stablecoins maintain a constant value, so banks face virtually no risk of losses due to volatility when using them to make payments. Moreover, many countries across Europe, Asia, and the Americas have crafted regulatory frameworks for stablecoins, adding an extra layer of safety for banks and financial institutions.

Ripple USD runs on the XRP Ledger, so transaction fees are still payable in XRP tokens. That means XRP isn't entirely redundant, but stablecoins are likely to soak up an increasing share of transaction volume over the long term because of their superior qualities.

I predict XRP will be significantly lower in five years

XRP experienced its first major breakout in late 2017, which culminated in a record high of $3.40 per token in January 2018. But by mid-2020, it had lost 95% of its peak value, and it then traded below $1 for almost the entirety of the next four years. It didn't recover until Donald Trump won the presidential election in 2024, and his pro-crypto policies drove the token to a fresh record high of $3.65 last July.

But the boost from favorable government policies and lighter regulation didn't last long, mainly because they did nothing to address XRP's structural shortcomings. Since Ripple Payments now supports not only stablecoins but also fiat currencies, banks don't have to use XRP to benefit from fast and affordable cross-border transactions. That means the token won't necessarily increase in value even if the network achieves mainstream adoption.

Plus, bridge currencies aren't necessarily supposed to appreciate over time. In my earlier example, the U.S. bank would be a buyer of XRP, but the Italian bank would be an equal seller when it converts the tokens into euros. So this transaction would create no value whatsoever.

XRP's blistering rallies were mostly fueled by speculative investors who thought the token would be a game-changer for the banking industry, but that simply hasn't materialized. As a result, I think its recent decline could get worse. If it matches the magnitude of the post-2018 downturn, a price of $0.18 per token from a recent price of $1.40 might be in the cards.

I'm not suggesting XRP will definitely fall that low, but it was trading below $0.50 five years after its 2018 peak, and nothing is standing in the way of a similar outcome this time around. Therefore, that is where I predict the token will be five years from now.

Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and XRP. The Motley Fool has a disclosure policy.