With XRP‘s (XRP 1.80%) price rising by 256% in the last three years alone, it’s a bit surprising that there’s still a trickle of substantive new reasons to buy it.
Nonetheless, there’s a set of upcoming catalysts that support the idea that buying this coin is a smart move. Let’s take a peek at what’s likely to occur soon, and why it’ll drive XRP higher over the long term.
This new instrument will deepen integration with the financial sector in a helpful way
Following in the footsteps of other cryptocurrency majors like Bitcoin and Ethereum, XRP could soon be included in a handful of different exchange-traded funds (ETFs) which are up for approval by regulators at the Securities and Exchange Commission (SEC), per filings made in late January by multiple asset manager companies, including Grayscale Trust and Purpose Investments.
Until recently, the SEC’s prior lawsuits against Ripple, the issuer of XRP, made the chances of such an ETF ever getting approved dubious. But, with the Trump administration’s pro-crypto stance, it is now more likely than not that ETFs holding XRP will be issued within the next year. That’ll be a catalyst for the coin to attain higher prices than before for several reasons.
First, the point of these ETFs is to make XRP an investable asset for investors with traditional financial accounts, like retirement accounts or brokerage accounts. Without an ETF, those investors would need to sign up for additional services, or use specialized cryptocurrency software to enable them to buy and hold the coins directly rather than via a proxy. Crypto enthusiasts probably weren’t dissuaded by those additional requirements. But it’s safe to say that there many people would only buy XRP if it was as easy as buying any other stock or financial instrument via the same interface that they use to invest in those securities.
The consequence of the ETFs getting approved, assuming they are, will be to increase the demand for XRP, and likely the average trading volume as well. As of Feb. 6, XRP generated 24-hour volume of around $8 billion.
As investors buy the ETFs, the issuers of the ETFs will need to buy XRP directly in order to properly deliver the investment performance of the underlying coin, which is what investors are looking for in the first place. Therefore, it’s reasonable to expect that there will be more upward pressure on the price of XRP, and also that the chain will generate more fees, which could be reinvested in improving its technology.
So there are two components of XRP’s investment thesis that stand to be supported by these ETFs, and that’s very positive for holders. It’s likely that the coin would get a bump upon news of an approval.
Keep your focus on the long term here
The longer-term advantages of the ETFs operating are far more significant than any post-approval bump, however.
With more integration between XRP and the traditional financial sector via the ETFs, the tightly related RippleNet payment network would have an opportunity to scale up more. That might enable it to drive fees even lower, or to make its transactions even faster — or just to spend more on marketing to recruit more users in traditional financial institutions, governments, or in the public. All those factors would make it a more appealing investment to hold over the coming years, not just in 2025.
What’s more, this current crop of ETF applications could be just the start. Future ETFs might combine holding XRP with other coins, like Bitcoin. Or they might attempt to bundle financial derivatives like futures into an ETF, which would have a more unpredictable effect on the price of the underlying coin.
No matter what the future holds, there’s no way to interpret the advent of XRP ETFs as a negative — once again, assuming the SEC actually approves them. Thus, if you’re thinking about buying this coin, there’s a good reason to do it sooner rather than later, even if you’re planning to hold it forever.
Alex Carchidi has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and XRP. The Motley Fool has a disclosure policy.
