Arguably, one of the primary beneficiaries of the pro-cryptocurrency policies implemented during the Trump administration has been the digital asset XRP (XRP -1.00%). On Election Day, XRP was valued at approximately $0.50. Currently, it enjoys a trading price around $2.20, reflecting an impressive 345% increase in just six months. Although much of the initial excitement surrounding Trump’s crypto-friendly stance has already been incorporated into XRP’s price, new developments are emerging that could further elevate its value over the next year.
Shakeup at the SEC
President Donald Trump ran on a platform that favored business and cryptocurrency, and he has largely followed through on that promise. A significant early action was the replacement of Gary Gensler, the former head of the Securities and Exchange Commission (SEC), who was known for his stringent regulatory approach toward cryptocurrencies. His successor, Paul Atkins, is recognized for his support of the crypto sector. This transition at the SEC carries substantial implications. Notably, it has led to the SEC dropping a prolonged lawsuit against Ripple, the entity behind the XRP token. For over four years, the SEC contended that XRP should be classified as a security rather than a commodity. With that legal battle now reportedly concluded, Ripple is expected to resume its efforts in expanding its business, which focuses on facilitating financial transactions. Furthermore, the absence of legal uncertainties surrounding Ripple should enhance its prospects for gaining institutional acceptance for its blockchain-based payment network, which specializes in cross-border transactions. While there were ongoing legal challenges, financial institutions were hesitant to fully embrace Ripple’s payment solutions.
U.S. Digital Asset Stockpile
In March, the Biden administration announced the establishment of both the Strategic Bitcoin Reserve and the U.S. Digital Asset Stockpile. The Strategic Bitcoin Reserve is dedicated solely to Bitcoin and thus does not influence XRP. However, the Digital Asset Stockpile is intended to include various cryptocurrencies owned by the U.S. government, including XRP. Prior to the announcement of the U.S. Digital Asset Stockpile, Trump mentioned that XRP was among the four cryptocurrencies that would be prioritized. This significant recognition followed a direct appeal from Ripple’s CEO, Brad Garlinghouse, urging the government to consider diversifying its cryptocurrency holdings beyond Bitcoin. It remains uncertain whether the U.S. government will ultimately decide to acquire additional XRP for the stockpile. Currently, any XRP within the stockpile would consist of assets seized or confiscated by the government. Therefore, it is crucial for cryptocurrency investors that the government makes purchases of XRP, as such actions could potentially drive the price upward.
New Stablecoin Legislation
Legislation concerning stablecoins is expected to be enacted by the end of the summer. At first glance, this legislative victory may not appear to significantly affect XRP, considering that XRP is classified as an altcoin and not a stablecoin. Nevertheless, there may be indirect effects. Ripple has recently launched a new dollar-pegged stablecoin called Ripple USD (RLUSD 0.05%), aimed at stimulating activity on the XRP blockchain. Despite its launch in December, Ripple USD has already achieved a market capitalization of $300 million, indicating that institutional investors are exploring new applications for XRP. There is an ongoing debate within the crypto community regarding how much this new stablecoin will benefit XRP. On one side, it could enhance transaction activity, create additional use cases for XRP, and elevate demand for the token. Conversely, the introduction of the new stablecoin might siphon off transaction activity from XRP, resulting in diminished demand for it.
Potential Price Impact on XRP
As previously mentioned, much of the initial excitement following the 2024 election has already been factored into XRP’s current trading price. The rapid ascent from a stagnant value of $0.50 to a 52-week peak of $3.39 within weeks suggests that there are rational explanations for this surge. However, promising opportunities remain due to these three political developments. A more crypto-friendly SEC increases the likelihood of approving a new spot XRP exchange-traded fund by the end of 2025. Additionally, any initiatives from the Trump administration to allocate non-taxpayer funds for the Digital Asset Stockpile could result in a significant price surge for XRP. While there is certainly much to be optimistic about, it is essential to remember that throughout its entire history, XRP has never traded above $4. Thus, while it is enticing to envision XRP reaching new heights, the most plausible scenario may involve a price increase that brings it back to its all-time high of $3.84, which was last seen seven years ago.
