XRP (Ripple) Is Down 34%. Should You Buy the Dip?
XRP gained 255% from November 2024 to January 2025, outpacing Bitcoin, Ethereum, and Dogecoin during the post-election crypto rally.
Economic uncertainty and concerns about international payment volumes create headwinds for XRP's cross-border payment focus.
A dollar-cost averaging approach, such as buying in thirds, could help you build long-term exposure while mitigating XRP's short-term volatility.
10 stocks we like better than XRP ›
The XRP (CRYPTO: XRP) cryptocurrency reached a multiyear record price of $3.31 per coin in January 2025. By May 30, the coin had retreated 34% to $2.18 per coin.
So XRP investors face a dilemma: Is the cryptocurrency a no-brainer buy at these lower prices, or will the price drop continue? Here's how I see it.
Two events boosted XRP's market price from November 2024 to January 2025. Together, they supported a third event with game-changing potential.
The Trump campaign in the 2024 presidential election included heavy support for cryptocurrencies. As a result, many cryptos soared after the election, as the incoming administration had promised to update crypto regulations, promote crypto mining on American soil, and more. Leading names like Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) posted double-digit price gains in November, and Dogecoin (CRYPTO: DOGE) more than doubled. But none of them could keep up with XRP, as the coin formerly known as Ripple gained 255%.
Trump's camp also wanted to set up a strategic cryptocurrency reserve, similar to the economy-calming reserve of physical gold in Fort Knox. Chatter about this future market-booster kept rising as the inauguration drew near. Crypto investors expected a "Trump bump" from the resulting influx of government-scale cryptocurrency orders, perhaps as early as the January 20 inauguration date itself. XRP was seen as a likely addition to the obvious Bitcoin, Ethereum, and Dogecoin holdings of this hypothetical crypto reserve, so the good times kept going for XRP investors.
A more crypto-friendly administration and the anticipated inclusion of XRP in federal crypto investments led to one inescapable conclusion. The Securities and Exchange Commission (SEC) lawsuit that has been hanging over XRP's head for four years would have to go away. This is arguably the biggest price-booster of them all, opening up the domestic business market for XRP and the Ripple Labs organization in a whole new way.
XRP's price peaked a couple of days before the inauguration. Ethereum and Dogecoin have also seen price drops of 27% or more since January 18. Bitcoin fell 25% but gained some momentum more recently, reaching new all-time highs last week.
None of these leading cryptocurrencies have experienced a Trump bump despite Republican majorities in the Senate and the House of Representatives. Even the Supreme Court leans Republican these days.
Despite this overwhelming power base, Trump's team hasn't done much to support cryptocurrencies so far. The Strategic Bitcoin Reserve was announced in March, alongside a smaller Digital Asset Stockpile of cryptocurrencies not named Bitcoin. But this wasn't the huge crypto-buying spree many investors had expected. Instead, the two crypto portfolios will largely just manage existing federal cryptocurrency holdings. More coins and tokens will largely come in as government agencies collect them from criminal courtroom proceedings.
That's not what the XRP camp had expected. The dream of a federal splurge on XRP coins was dead.
Meanwhile, economic uncertainty weighed on all sorts of investment markets this spring. People worry about tariffs, trade conflicts, perhaps a return to sky-high inflation rates, and more. That adds up to an unfavorable environment for risky investment ideas, including most of the crypto market. XRP's focus on international money transfer services is particularly unhelpful, as border-crossing payment volumes could drop dramatically over the next few years.
Despite a volatile economy and unpredictable government support, XRP still has several promising qualities.
The SEC lawsuit has almost been settled, and the Digital Asset Stockpile exists. Several financial firms have filed the paperwork to open XRP-based exchange-traded funds. Ripple Labs launched a Ripple USD (CRYPTO: RLUSD) stablecoin to simplify the global management of payment-processing funds. And the RippleNet payment service, where XRP plays many parts in the cash transfer process, sees nearly a million payment transactions per day. That's up from about 150,000 daily transactions two years ago.
Taken together, these traits make XRP one of the top 5 cryptocurrencies I'd buy in a downturn. Some might say that the current 34% price dip isn't big enough and that you should wait for a deeper discount. That's perfectly fine, of course. Then again, I have no idea where XRP's prices might go in the short term. The upcoming summer is a black box of continued uncertainty. Holding off could be exactly the right idea, but the coin could also skyrocket again on short notice.
If you agree with my generally positive view of XRP's long-term prospects, you may want to start a small position today and add to it over time. Buying in thirds is one disciplined option. That way, you'll at least have some exposure to this exciting cryptocurrency, with the no-pressure option to add more if the price dips even lower.
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Anders Bylund has positions in Bitcoin, Ethereum, and XRP. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and XRP. The Motley Fool has a disclosure policy.
XRP (Ripple) Is Down 34%. Should You Buy the Dip? was originally published by The Motley Fool
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