Where Will The Cryptocurrency XRP Be in 5 Years?
Key Points
Ripple Payments can use XRP or stablecoins like RLUSD to move money across borders.
Ripple’s growing success may not translate into stronger demand for XRP.
After a rough year, Bitcoin is back up above the $80,000 mark, and with it, XRP (CRYPTO: XRP) is once again trading near $1.50.
The rally has put XRP back on investors' radar. But the token's long-term case depends on a lot more than where Bitcoin goes next or any boost it gets from a change in regulation.
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So, what does it depend on? And is now the time to jump back in? Where will XRP be in five years?
Why Ripple's success may not lift XRP
XRP's thesis has always depended on the success of Ripple, the private company behind the token.
There's a world in which five years from now, Ripple has become an essential part of international finance. Here, XRP is used to move hundreds of billions of dollars across borders, saving time and money. If that happens, today's price may look cheap.
But I think there's another possibility -- in fact, a probability in my mind. Ripple remains a major player in global finance, and its products continue to move hundreds of billions of dollars around the globe. However, instead of XRP serving as the backbone of these transactions, Ripple's stablecoin, RLUSD, is the workhorse.
Here, the RLUSD stablecoin is used as the go-between when converting currencies. XRP's place in the ecosystem is now second fiddle, and the excitement around the token has waned.
This isn't purely hypothetical: Ripple says its payments platform can use either XRP or a stablecoin such as RLUSD, and in my view, a real push in that direction from the company seems apparent. Ripple's own website now prominently features "integrate stablecoin payments into your business" -- not "integrate XRP into your business."
Where XRP could be in 2031
My read is that the most likely scenario is one in which Ripple has grown while XRP has struggled. And as more and more investors see that Ripple's success does not directly translate into XRP's success, enthusiasm for the token will fade, further pressuring its price.
Image source: Getty Images.
Look, crypto is notoriously hard to predict, in large part because no one really knows how to value it. There are no earnings or free cash flows to point to. But I can still try.
While there will likely be some major rallies along the way, by 2031, I predict XRP's price will be back below $1.
Johnny Rice 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.