Can XRP (Ripple) Hit $5 Since the SEC Dropped Its Lawsuit?

Ripple is the technology company that developed XRP (CRYPTO: XRP), the digital currency native to the XRP Ledger. Ripple uses that blockchain platform to offer cross-border payment solutions to banks and other financial institutions like merchant services providers.

Ripple CEO Brad Garlinghouse recently gave XRP holders some long-awaited good news: The Securities and Exchange Commission (SEC) has dropped its lawsuit against the company. XRP has advanced more than 10% since the announcement, but some investors think the next stop is $5. That implies more than 100% upside from its current price of $2.45.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Is that realistic?

Ripple weathered a lengthy legal battle with the SEC

In 2020, the Securities and Exchange Commission sued Ripple for allegedly selling XRP tokens as unregistered securities directly to institutional investors and indirectly to retail investors. In 2023, a U.S. district court issued a split decision. The judge said the direct sales to institutional investors violated securities law, but the indirect sales to retail investors did not.

Ripple was ordered to pay a $125 million fine, far less than the $2 billion penalty proposed by the SEC. Last year, the SEC appealed the decision, reasserting its belief that XRP sold to retail investors was a violation of securities law. But Ripple CEO Brad Garlinghouse told Bloomberg on March 19 the SEC has dropped its appeal, meaning the company is no longer tied up in a legal battle with the regulator.

Why demand for XRP could increase

XRP makes cross-border payments faster and cheaper. It is an alternative to SWIFT (Society for Worldwide Interbank Financial Telecommunications), the system most banks use to facilitate international money transfers. SWIFT payments often incur high fees due to the involvement of intermediaries and may take days to settle. But XRP payments settle in seconds and cost a fraction of a cent.

Importantly, XRP supply is limited to 100 billion tokens, but that figure actually declines over time because a small amount of the currency is destroyed with each transaction. So, the future price of XRP is entirely dependent on demand. And there are a few reasons to think demand will increase. First, the SEC dropping its appeal could make Ripple's payments solutions more attractive to financial institutions.

Second, Ripple recently introduced a stablecoin called Ripple USD (RLUSD), which serves as a less volatile bridge currency for international money transfers. That could create XRP demand directly and indirectly. RLUSD payments on the XRP Ledger still incur transaction fees that must be paid in XRP, which directly adds to demand. Likewise, RLUSD may lead to more decentralized applications on the blockchain, which would indirectly add to demand.

Third, several asset managers have submitted paperwork to the SEC asking permission to create spot XRP exchange-traded funds (ETFs). Those investment products would provide direct exposure to XRP without the hassle and high fees associated with cryptocurrency exchanges. Importantly, Bitcoin doubled during the year following the introduction of spot Bitcoin ETFs. It stands to reason XRP could achieve similar price appreciation.

Image source: Getty Images.

XRP could hit $5 under the right circumstances

XRP has a market value of $141 billion, which makes it the fourth largest cryptocurrency behind Bitcoin, Ethereum, and Tether. Suffice it to say XRP has a high degree of visibility, which makes greater adoption by banks and other financial institutions plausible. It also means spot XRP ETFs could unlock significant demand among institutional investors. If those things happen, I believe XRP could reach $5.

However, there are caveats. Cryptocurrency is still a relatively new asset class, which makes it especially difficult to forecast the future. Also, as trite as it sounds, there is no guarantee XRP will be worth anything in a few years. Its price has fallen 95% from a record high in the past, and it may drop to zero in the future. Investors should not allocate a single cent to XRP if they aren't prepared to lose it.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $307,378!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $40,591!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $512,780!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

Continue »

*Stock Advisor returns as of March 18, 2025

Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and XRP. The Motley Fool has a disclosure policy.