Should You Buy XRP (Ripple) While It's Under $3?

The XRP (XRP -6.12%) cryptocurrency is skyrocketing these days.

After trading sideways or down for more than three years, the crypto formerly known as Ripple sprung to life in November. As of Dec. 17, XRP has gained 396% in six weeks and risen in the blockchain market ranks. This is now the third-largest name in the crypto market, sorted by total market value. Before this market-stomping run started, XRP sat in seventh place.

The $3 price point is only a 12% jump away at this point, and the all-time high from 2018 awaits at $3.84. Is XRP running out of jet fuel, or is this the right time to jump aboard this red-hot crypto rocket?

How XRP builds enduring value

Sending money to a company or person in another country can be a frustrating experience. Fees are high, the transaction can take several days, and exchange rates can make significant moves before the payment settles. XRP was created to remove these discouraging issues and make it easier to move cash from one nation to another.

XRP is a very functional crypto token. It serves as the cryptocurrency backend of RippleNet, a payment service that can send money from one country to another with minimal fees and quick transaction settlements. Banking partners in dozens of countries help convert the money from their local currency and back again, creating a smooth, user-friendly money transfer experience for the user.

This cryptocurrency gains value by burning a few tokens to extract a very small fee for each transaction. The average cost per transaction varies over time, hovering near 0.002 tokens in recent weeks. That’s about half a cent at XRP’s current price.

So XRP becomes a little more scarce and more valuable with every transaction. The token also gains value when new partner banks set up XRP reserves to take part in the RippleNet system, and the token can also soar when people buy and hold XRP as an investment. Moreover, there is no mining process for XRP — Ripple Labs created 100 billion tokens in 2013 and holds nearly half of that supply off the market in escrow accounts. The organization can release some of these off-market XRP tokens to raise some old-school cash, or hold it back to support the token’s value.

Why XRP is soaring now

Ripple Labs is planning to launch an XRP-based stablecoin, dubbed Ripple USD. This coin should always be worth $1, with trading enabled across the XRP and Ethereum (ETH -3.38%) blockchain ledgers. Ripple Labs will back this stablecoin with a dollar-based cash reserve and make it an integrated part of the global RippleNet system.

This addition to the XRP ecosystem will make the border-crossing payment experience even smoother. It should also inspire new business ideas and financial applications, such as foreign exchange markets and token-based transfers of real-world assets. Your next home or car probably won’t be tied to XRP and Ripple USD contracts, but the market could go there in five or 10 years.

The pending stablecoin launch is not the whole story, of course. The price surge started near the U.S. elections in November, and XRP investors have more reasons than most to be excited about the incoming regime change.

Gary Gensler, the Securities and Exchange Commission’s (SEC) chair in the Biden era, has dragged his regulatory feet on many cryptocurrency issues. He spearheaded the lawsuit against Ripple Labs that held the cryptocurrency down in recent years. His probable replacement, cryptocurrency lobbyist Paul Atkins, may drop the lawsuit and make other XRP-friendly changes. For example, exchange-traded funds (ETFs) tied to XRP spot prices are probably coming soon.

Where can XRP go from here?

The XRP system is gaining new users by the truckload. The number of active XRP accounts soared to all-time highs in early December, and they are also performing more transactions per account.

So XRP’s price jump makes sense, and I see serious long-term value in this helpful crypto token. That being said, you might see increased volatility in the XRP chart in 2025. The crypto market as a whole is surging, driven by last spring’s Bitcoin halving, the election results, and generally rising awareness of cryptocurrency solutions. XRP should benefit from this trend in a general sense, but other cryptocurrencies may pass it on the total value charts.

I still think XRP is poised to deliver strong returns in 2025 and continue to rise in the long term. The global market for border-crossing payments is measured in hundreds of trillions of dollars per year, and even a minuscule slice of those transactions could make financial behemoths out of XRP and Ripple Labs.

Just don’t expect a smooth ride to the stars. There will almost certainly be heavy turbulence on this trip, perhaps including some painful price corrections along the way. But yes, XRP has the potential to rise high above $3 per token eventually. Buying a few low-priced tokens today could serve you well over the years.