Although XRP (CRYPTO: XRP) was once a crypto darling, it hasn't done much in recent years. Currently, XRP is trading for just $0.57 and is down about 10% for the year. By way of comparison, crypto bellwether Bitcoin is up a robust 40% for 2024.
But there's no reason to give up hope quite yet if you're thinking about investing in XRP. There are three reasons XRP could turn things around by the end of this year. Let's take a closer look.
A more favorable legal and regulatory outlook
Most importantly, the worst of XRP's legal and regulatory issues may be in the rearview mirror. A nearly four-year court battle with the SEC wrapped up in August, and it looks like Ripple Labs (the company behind the XRP token) is going to live and fight another day. Yes, the company will need to pay penalties of $125 million for improperly selling XRP tokens to institutional investors, but that's much less than the estimated $2 billion in fines the SEC was reportedly looking to impose on Ripple.
This legal and regulatory overhang was the primary factor that hurt the XRP's value during the past few years. If Ripple is indeed free and clear of any further SEC regulatory action, then this could be the green light for investors to load up on XRP.
New growth opportunities
Needless to say, the protracted court battle with the SEC has been a serious drag on Ripple's U.S. operations. Partners have broken ties with Ripple. Cryptocurrency exchanges have delisted XRP. And Ripple has been forced to look for growth opportunities abroad.
That could be why you haven't heard much about Ripple or XRP recently -- all the action has been happening overseas. For example, at least eight different countries are now experimenting with XRP's blockchain technology to create central bank digital currencies (CBDCs), and that number could increase to 30.
In 2024 and beyond, new business expansion opportunities are likely to open up in the U.S. as well, and that has the potential to push XRP's price significantly higher. For example, Ripple is getting ready to launch a new dollar-linked stablecoin (known as Ripple USD) for the $150 billion stablecoin market. If Ripple USD is able to take over even a tiny portion of the market dominated by Tether or USD Coin , that could be huge for XRP's future growth prospects.
New ETF incoming?
And there's one more reason to be excited if you're an XRP investor. Investment firm Grayscale just announced the creation of a new investment trust that will let accredited investors buy XRP. That's important because Grayscale is a key player when it comes to creating new investment products for crypto investors. Two of Grayscale's investment trusts -- one for Bitcoin and one for Ethereum -- have been converted into spot ETFs .
So the thinking here is that the creation of a new XRP trust could be the first step on the path to launching a spot ETF for XRP. And, as we know from all the hype and buzz that the new spot Bitcoin ETFs created, this could be huge in terms of new investor inflows. Money pouring into XRP from retail investors could push the price of XRP much higher.
Image source: Getty Images.
The only problem here, of course, is the SEC. Do you really think the SEC is going to approve an ETF for XRP after a bruising four-year court battle with Ripple Labs? From a purely investment perspective, the best possible outcome would be the election of a pro-crypto U.S. president in November, and the replacement of the current head of the SEC (Gary Gensler) with someone who is more pro-crypto.
Look before you leap with XRP
Although all three of these catalysts have the potential to help XRP's value rise, you definitely need to do your due diligence here. For example, it's still a bit perplexing why the price of XRP did not soar after the court ruling in August. Many were expecting an XRP rally, but it hasn't happened.
That said, if you are looking to diversify your crypto portfolio away from Bitcoin and Ethereum, XRP could be a very interesting investment opportunity. A small investment today could lead to big gains in 2025 and beyond.
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Dominic Basulto has positions in Bitcoin, Ethereum, and USD Coin. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and XRP. The Motley Fool has a disclosure policy .
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