Should You Buy the Dip on XRP?

Heading into 2025, XRP (CRYPTO: XRP) was the hottest crypto on the planet. But after hitting a 52-week high of $3.39 in January, XRP has fizzled out. It's now down 35% from its 2025 peak, and investors are understandably concerned.

Is now the time to buy the dip on XRP? Or is your money better spent elsewhere? Let's take a closer look.

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Pro-crypto euphoria

Heading into November, XRP had basically flatlined at the $0.50 price level. However, after the presidential election, it suddenly surged, eventually reaching a multi-year high.

This makes sense, of course, because XRP was the one cryptocurrency destined to get the biggest bounce from a pro-crypto Trump presidency. Up until November, dark regulatory clouds were hanging over Ripple, the company behind the XRP token. The Securities and Exchange Commission (SEC) claimed that XRP was a "security" and not a "commodity." This asset class is subject to stricter regulations regarding trading, ownership, and reporting requirements.

However, as soon as Trump was elected, XRP skyrocketed. The logic was simple: a Trump presidency would likely lead to a shakeup at the SEC, which would then help lift all the regulatory clouds hanging over Ripple and XRP. And that's exactly what happened.

The problem is that this development has been replaced by a new narrative around global trade and tariffs. All of last year's pro-crypto euphoria has already been priced into XRP, and investors are looking for a new narrative to drive XRP higher.

Spot ETFs incoming

The most likely new catalyst is SEC approval of spot XRP exchange-traded funds (ETFs). Already, there are several spot XRP ETF applications in the pipeline, including ones from Franklin Templeton (NYSE: BEN) and WisdomTree (NYSE: WT).

The thinking here is that a new pro-crypto approach at the SEC will give it the freedom to sign off on at least one of these ETF applications. The timing has been pushed back to the fourth quarter (Q4), but prediction markets are giving this a 93% chance of happening by the end of 2025. It's almost just a matter of "when," not "if."

Image source: Getty Images.

If the success of the spot Bitcoin ETFs is any guide, then these new spot XRP ETFs could result in a tsunami of new investor money flooding into XRP, helping to push up its price.

XRP as a treasury asset

As further proof of just how mainstream XRP has become, some publicly traded companies are now thinking about adding XRP as a treasury asset to their balance sheets. This is a strategy that was first popularized with Bitcoin (CRYPTO: BTC), and now it looks like the same strategy could be coming for XRP as well.

One example is sustainable energy producer VivoPower International (NASDAQ: VVPR), which plans to buy $100 million of XRP for its treasury. And a Chinese company recently filed with the SEC to buy $300 million of XRP for its treasury. It remains to be seen if other companies will follow their lead, but XRP bulls are understandably enthusiastic about this development. The coin was never meant to serve as a long-term value storage system, but XRP investors aren't complaining about this new idea.

But what about the fundamentals?

That's the good news. The bad news, unfortunately, is that usage of the XRP token has fallen off a cliff over the past two months. As demand for XRP falls, it means that there will likely be downward pressure on its price.

Keep in mind: XRP is essentially a bridge currency. That means it's primarily used to facilitate cross-border payments and transfer value between different fiat currencies. Typically, users convert one fiat currency into XRP, send it across the XRP blockchain to a user in another country, who then converts it into another fiat currency. It might sound complex, but it's cheaper and more efficient than using traditional finance tools.

However, now that global trade has been turned upside down, the growing consensus is that XRP may no longer be as needed as it once was. After all, who's sending money across borders these days? That could help to explain why the fall in demand for XRP has been so dramatic over the past two months. This time period lines up perfectly with the announcement of the Liberation Day tariffs on April 2.

Stablecoins vs. XRP

Moreover, there appears to be another factor at work here, and that's the emergence of stablecoins as yet another way to send cross-border payments. Stablecoins are now a $250 billion industry, and it's clear that they are here to stay.

In fact, Ripple recently launched a stablecoin of its own. While it was originally intended to help stoke demand for XRP, this stablecoin could end up cannibalizing some of the transaction activity of XRP, further reducing demand for the token.

And that, of course, is going to further keep a lid on future price gains for XRP. In fact, a growing number of investors are now warning that XRP could drop below the $2 mark soon.

Should you buy XRP?

The decision of whether or not to buy XRP is more complicated than you might think. While there are definitely near-term catalysts waiting to send XRP higher, it all comes amid a backdrop of macroeconomic uncertainty.

Thus, before you decide to buy XRP, you need to be comfortable with the current situation involving global trade and tariffs. Even though XRP has enormous upside potential going forward, it may continue to trade sideways until the tariff situation is resolved once and for all.

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

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