It’s been quite the run for XRP (XRP 1.41%) since President Donald Trump won the election back in November. Although it’s been volatile like much of the sector, the world’s third-largest cryptocurrency has ripped roughly 374% since Election Day (as of March 22).
When Trump won, many investors rejoiced, believing the new administration would usher in an era of pro-crypto policies that would advance the industry and perhaps make the U.S. the place to be for crypto innovation. Few cryptocurrencies have performed as well as XRP since then.
Should you buy the coin below $3?
The overhang is gone
One big reason XRP has performed well since Trump won has to do with its underperformance in the years leading up to the election. The U.S. Securities and Exchange Commission (SEC) sued Ripple, the company behind XRP; current CEO Brad Garlinghouse; and co-founder Chris Larsen in 2020, alleging that the parties sold XRP as an unregistered security in 2013.
The lawsuit has been closely watched by the entire sector because if XRP and other cryptocurrencies had been deemed unregistered securities, the SEC would have had a lot of regulatory jurisdiction over XRP and potentially many other cryptocurrencies.
Crypto proponents do not want to deal with strict securities regulations and would prefer cryptocurrencies be regulated as commodities and overseen by the Commodity Futures Trading Commission. During this time, investors seemed to shy away from XRP because Ripple, Garlinghouse, and Larsen were the defendants in this high-profile lawsuit.
Image source: Getty Images.
In 2023, a federal judge ruled that XRP was an unregistered security when sold to institutional investors but not an unregistered security when sold to retail investors through exchanges. Many considered this ruling a victory for Ripple, Garlinghouse, and Larsen. The SEC appealed parts of the decision. However, once Trump won the election and signaled a pro-crypto policy approach, it became clear that the appeal probably wouldn’t last. SEC Chair Gary Gensler stepped down once Trump was sworn in, and recently, Garlinghouse announced on X that the SEC had dropped its appeal. This outcome had looked increasingly likely in recent weeks.
The end of the lawsuit once and for all removes a clear overhang on XRP and also paves the way for an eventual spot XRP exchange-traded fund (ETF). Some ETF analysts believed that the lawsuit would need to end for a spot XRP ETF to happen. But even before it did, many asset managers had submitted proposals to the SEC to launch spot XRP ETFs.
Following the conclusion of the SEC appeal, Garlinghouse also said in an interview with Bloomberg Television that the company could consider an initial public offering (IPO) if it wanted to, but it’s not a priority in early 2025.
Should you buy XRP below $3?
While a lot of the news associated with the SEC dropping its appeal and XRP getting a spot ETF has likely been priced in at this point, better banking laws and removal of the overhang should allow Ripple to grow its customer base and therefore expand the use of XRP. Ripple works with financial institutions to provide faster, more efficient options for activities like real-time cross-border payments.
Regulators under the Trump administration are expected to make it easier for banks to interact with cryptocurrencies, which could make more banks interested in partnering with Ripple. Ripple also launched its own dollar-pegged stablecoin called RLUSD. This token will trade on the XRP blockchain network, which the company believes will increase the need for XRP as a “bridge asset.”
Ultimately, I am intrigued by some of the use cases of XRP and the token runs on a solid network from a technical perspective. That said, you should still keep your position smaller and more speculative. All cryptocurrencies are volatile and they’re hard to value because they don’t generate cash flows or earnings. There’s still a lot we don’t know about the sector because it’s only been around for a little over 15 years.
