Could Buying XRP (Ripple) Today Set You Up for Life?

The decisions you made 10 or 20 years ago made a difference in where you are today. More importantly, your decisions now will impact where you are 10 or 20 years in the future. One of the most critical decisions you can make now that will affect you years down the road is what you do with your money.

XRP (CRYPTO: XRP) (Ripple) has emerged as one of the hottest cryptocurrencies around largely because many think investing in it will make them wealthy. Are those expectations realistic? Could buying XRP today set you up for life?

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History is on your side

Of course, the amount it would take to set a person up for life will differ from person to person. However, I suspect most people would agree that $1 million would go a long way toward accomplishing the goal. If you want to make $1 million investing in XRP, history is on your side.

Let's suppose you heard about XRP in early 2015. You'd be a millionaire today if you had bought $5,000 worth of the crypto token then and never sold it. However, we shouldn't dismiss how difficult it would have been to hang onto your entire position in XRP for 10 years.

Between February 2015 and today, XRP fell at least 40% half a dozen times. At one point (in February 2020), the cryptocurrency was more than 90% below its previous peak. Many investors would have bailed out long before then.

XRP Price data by YCharts

The temptation to sell would also probably have been hard to resist in the multiple times during the period when XRP skyrocketed. For example, an initial investment of $5,000 in the digital token on Feb. 20, 2015, would have been worth nearly $414,000 by late 2017. I suspect many of us would have opted to take the money and run with an almost 83x return in less than two years.

Potential catalysts ahead

Mutual funds come with disclaimers that say something along the lines of "past performance is not indicative of future results." This statement is true about XRP, too. There's no guarantee the cryptocurrency will deliver anywhere near the level of returns in the future that it has generated in the past. That said, XRP could have several potential catalysts ahead.

One we're seeing materialize already is the creation of exchange-traded funds (ETFs) that own XRP. Brazil recently approved the world's first spot XRP ETF. Several companies are awaiting U.S. Securities and Exchange Commission (SEC) approval of similar ETFs.

There's optimism, as the SEC with Donald Trump again in the White House seems more likely than not to approve XRP spot ETFs. Furthermore, the overall pro-cryptocurrency stance of the second Trump administration could foster an environment where XRP as well as many other digital tokens can flourish.

Speaking of the SEC, the agency is embroiled in a legal battle with Ripple (the company behind the XRP ledger). Speculation is rampant that the SEC could drop or pause this lawsuit. It's also possible that the case could be settled in a way that's favorable to Ripple (and therefore positive for XRP holders).

Answering the question you clicked on

So let's return to our original question: Could buying XRP today set you up for life? The answer is...maybe.

Investing enough money in XRP in the past could have made you quite wealthy. The cryptocurrency has multiple catalysts that could drive its price significantly higher, perhaps even over the next few months.

However, it's important to remember that, unlike stocks, XRP has no intrinsic value. The digital token is worth only what others think it's worth. There's no guarantee that the market dynamics won't change drastically over the next few years resulting in XRP being valued much lower than it is now. Because of this real risk, don't put any money in XRP you're not willing to lose.

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

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Keith Speights 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.