XRP: Buying Dip? | The motley fool

Most cryptocurrencies have been soaring in 2023. As of Friday morning, Bitcoin had scored 60.5% so far this year and Ethereum was up by 45.3% in the same period. Solana is recovering well from its association with the FTX meltdown last November, and is up 105.7% so far in 2023.

But XRP (XRP 3.95%) didn’t get the memo. The cross-border payments specialist has only gained 10.8% this year, missing out on the industry gain. XRP’s stagnant valuation shows a 23.7% underperformance against Ethereum, a 29.6% decline against Bitcoin, and a 46.8% decline against Solana.

Sure, XRP’s token price has risen in US dollar terms, even higher than a 2.7% year-to-date gain for S&P 500 stock market index. But it is a significant drop compared to its competitors in the crypto market. One Bitcoin was worth 48,068 XRP tokens when the New Year’s fireworks lit up the sky. Today, the same Bitcoin token will give you 68,310 XRP coins.

So let’s say you want to invest in some crypto as the sector seems to be thawing out of the last crypto winter. Should you buy XRP on this relative decline, or are you better off with the proven Bitcoin and Ethereum tokens? Maybe even a slightly speculative bet on a full-throated comeback for Solana?

The upside to XRP’s market-moving downside

First of all, we need to address the elephant in the room: the ongoing Securities and Exchange Commission (SEC) lawsuit against Ripple Labs, the company that created XRP. This legal battle has been going on since December 2020 and is undoubtedly holding back XRP’s valuation. Until the lawsuit is resolved, one way or another, XRP’s price may remain stagnant or even drop further.

American crypto exchanges such as Robinhood Markets and Coinbase Global won’t even let you buy, sell, send or receive XRP tokens until the legal conundrum is resolved. And with good reason, of course – if the SEC wins, doing business with XRP tokens could open up the exchanges to lawsuits and other penalties of their own.

However, there are reasons to believe that even an unfavorable outcome in the lawsuit will not be the end of the road for XRP. As I have said many times before, the crypto market is hungry for sensible regulation. Indeed, even a draconian and over-the-top penal rulebook would be better than the lack of clarity investors have today. So while a negative outcome for Ripple could set a harsh precedent, it would also provide a much-needed step forward for proper regulation of digital assets.

Ripple’s solid business model

But let’s put the lawsuit aside for a moment and focus on Ripple’s fundamentals. The company has made significant progress in expanding its global payments network, with partnerships across various industries and regions. Ripple plays a central role in the development of central bank digital currencies, working closely with governments in places like Eastern Europe and Southeast Asia.

Another factor to consider is XRP’s unique use case. Bitcoin functions primarily as a store of value while Ethereum powers decentralized apps with smart contracts. XRP is different. Instead, it acts as a bridge currency in cross-border payments. This means that XRP’s success is linked to the introduction of Ripple’s technology into the global financial system.

And on that note, XRP is on a roll in the market despite the SEC lawsuit’s chilling effects. XRP is the sixth largest crypto in the market today in terms of total market capitalization. It is also in active use with a global transaction volume of $915 million in the last 24 hours. Only Bitcoin, Ethereum, Binance coinand the three most popular stablecoins can beat that number.

XRP is a diamond in the rough

So, should you buy the XRP dip? In my opinion it is a good idea.

Despite XRP’s weak performance compared to other cryptocurrencies in 2023, the company’s unique application and global expansion make it a promising investment opportunity. While the ongoing SEC lawsuit against XRP is a significant concern, it should be seen as a mere speed bump rather than a game changer. Even a negative outcome in the lawsuit will not drop the final curtain for XRP. Remember, any outcome at all should support the development of much-needed regulation in the crypto market.

And that legal pain has been priced into XRP’s chart since the SEC filed the lawsuit. The token has lost 36% of its value during the courtroom battle. At the same time, Bitcoin and the S&P 500 have moved largely sideways. A $10,000 investment in Ethereum has grown to $25,500 today, and Solana’s tenfold increase would make this chart pretty unreadable:

XRP price data by YCharts

With XRP’s active use and sixth largest market capitalization in the crypto space, investing in XRP during this relative downturn could prove to be a wise decision. This crypto has some catching up to do.

Fortune favors the bold, and investing in XRP can be a bold move that pays off in the long run. And if the end of the lawsuit leads to another price drop, I’ll take another look and maybe double down on this promising idea at an even better starting price.