Which Is More Likely to Hit $5: XRP (Ripple) or Shiba Inu?

XRP (CRYPTO: XRP) and Shiba Inu (CRYPTO: SHIB) are both subjected to a never-ending cyclone of heady price targets promoted by their evangelists. As it so happens, in the past, some of those high prices have been hit and even exceeded.

But which of these coins is more likely to go to $5, given where they are now and the drivers for their success (or lack thereof)? Let's dig into the details.

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There's more than one factor making this an easy call

XRP and Shiba Inu have both been called meme coins, though when referring to the former asset, it's mostly been a barely veiled jab rather than a serious factual claim.

Whereas Shiba Inu is transparently a token that has no utility and is barely credible as a store of value, XRP is both useful as a tool and as an asset. Its market cap of $142 billion is the result of banks, currency exchanges, and institutional investors buying and holding it so that they can use it to cheaply make international money transfers and avoid exchange fees. Plus, its blockchain is home to stablecoins that are used to process payments.

Image source: Getty Images.

The issuer of XRP, Ripple, is also continuing to invest in building out the chain's technology to make it a more attractive place for holders of large amounts of capital to park it there. That includes making native features those holders need, like for regulatory compliance, as well as providing platforms for lending and borrowing. And in the future, the chain aims to be a place for money managers to hold their assets on the blockchain so that they can be handled with less friction than legacy technologies.

Neither asset is anywhere close to $5; XRP's price is about $2.40, whereas Shiba Inu's is $0.000015, a tiny fraction of a penny. Therefore, on the basis of the math, XRP only needs to slightly more than double to hit the target, while Shiba Inu would need to rise by several orders of magnitude and then some. Don't hold your breath for that to happen.

There also is a deeper reason that XRP is the better investment regardless of the $5 target. Its price at any given moment, while linked to the market's sentiment about the coin, is not solely dependent on sentiment in the long run because its value is likely to increase over time as a result of the work that Ripple is investing in it. While Shiba Inu's team has also attempted to develop features around it, like the Shibarium Layer-2 (L2) chain, there's little reason to expect capital to flow there in substantial quantities.

So Shiba Inu's price is more or less purely defined by how excited investors are that it will go to the moon. And that excessive bullish attitude tends to be very fragile, which makes it very unlikely for the token to experience a protracted run-up over the long term.

Keep your expectations calibrated appropriately

XRP is the only valid investment choice here. But can XRP actually go to $5 anytime soon? It's more likely than it sounds, but don't bet the farm on it.

On June 17, regulators at the Securities and Exchange Commission (SEC) will need to rule on whether to permit exchange-traded funds (ETFs) holding XRP. If regulators assent -- and given their recent dovish approach to cryptocurrencies, it's fairly likely that they will -- it will represent a further ratification of XRP's value as an investment. It also will end up generating more trading volume for XRP's chain, as ETF issuers will need to buy and sell it to balance their holdings that underpin the ETFs. That could spur higher prices for the coin, as issuers tend to have a lot of capital.

But that won't cause the coin to double on its own. Nor will any other potential catalyst that's currently on the horizon for XRP. Instead, its path to doubling is likely going to be a slow grind built on a combination of regulatory green lights, technology development, and adoption by institutional investors and other major players in the traditional finance industry.

At the moment, the stars do look to be aligning on each of those fronts. Just be aware that you will need to be patient for these positive factors to play out and drive up the coin's price.

Should you invest $1,000 in XRP right now?

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Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends XRP. The Motley Fool has a disclosure policy.