Is XRP (Ripple) a Buy, Sell, or Hold in 2025?

With its price up about 240% year to date, Ripple's native token, XRP (CRYPTO: XRP), is one of several cryptocurrencies that have soared in response to Donald Trump's presidential election victory. With a market cap of $121 billion, it has minted plenty of millionaires out of its early backers.

The case for optimism is simple. During the next four years, many expect the new administration to help ease regulations on digital assets, potentially leading to wider adoption. But will the reality live up to the hype? Let's dig deeper into how XRP might perform in 2025 and beyond.

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A particularly useful cryptocurrency

Many blockchains promise to revolutionize finance. However, few have come closer than Ripple, a digital network designed to facilitate international money transfers. Its tradable token, XRP, serves as the bridge between currencies. For example, if an American wanted to send money to Japan, Ripple would let them convert dollars to XRP and then convert the XRP to yen without dealing with slow and costly intermediaries.

Image source: Getty Images.

According to analysts at McKinsey, global payments are a $2.4 trillion revenue opportunity that could expand at a compound annual growth rate (CAGR) of 5% to $3.1 trillion by the end of 2028.

There is good reason to believe Ripple could disrupt this opportunity because of its speed and cost advantages over alternatives like the Society for Worldwide Interbank Financial Telecommunication (SWIFT). Unlike SWIFT, which can take several days to settle a transaction, Ripple's transactions process in seconds. Ripple is also relatively cheap to use, with transactions costing just 0.00001 XRP, or a fraction of a cent. Traditional international wire transfers can cost $35 to $50.

Under regulatory pressure

Unsurprisingly, Ripple and its token, XRP, have been the subject of intense regulatory scrutiny. For starters, international payments are geopolitically sensitive. The industry is currently dominated by the U.S. dollar (which represents 58% of global payments outside the Eurozone), and alternative bridge currencies like XRP could reduce its influence. Cryptocurrencies could also help countries avoid U.S. sanctions.

That said, Ripple's biggest challenges are a little closer to home. In August, the platform's developer, RippleLabs, was ordered to pay the Securities and Exchange Commission (SEC) a $125 million fine for selling XRP tokens as unregistered securities. However, the platform won a partial victory because this ruling differentiated between direct institutional sales (where XRP can be considered a security) and sales to retail investors on secondary markets, where it is not a security.

This decision clears up some of the uncertainties facing XRP. And many investors believe the new administration could offer further benefits because of Trump's conciliatory approach to the industry. According to the New York Times, Trump's pick for SEC chair, Paul Atkins, advocates more relaxed crypto regulation -- a sharp contrast to the current SEC head, Gary Gensler, who prioritized aggressive oversight.

Wait on this one

The future looks bright for Ripple and its native token, XRP. The asset has significant potential for real-world utility, and the prospects for less regulatory uncertainty could serve as a green light for more institutional investors to get involved. That said, cryptocurrencies don't have revenue or earnings, making them difficult to value based on traditional financial metrics like the price-to-earnings (P/E) ratio or price-to-sales (P/E) ratio.

After seeing its value more than triple in 2024, XRP may have already priced in much of the fundamental tailwinds expected in 2025. With that in mind, long-term investors may want to wait for some of the crypto hype to die down before considering a position in the token.

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

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Will Ebiefung 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.