XRP (XRP-USD) investors have enjoyed a solid stretch over the past year, supported by a friendlier regulatory tone from the new administration. That improved backdrop came to a head when the SEC ultimately walked away from its long-running lawsuit accusing Ripple Labs of selling XRP as an unregistered security. That had been a major overhang on sentiment, and the result has been a 12-month surge of 394%.
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However, for those hoping the gains have laid the groundwork for more upside, according to investor Johnny Rice, the future does not hold much promise for the cross-border payments-focused coin.
“Despite this incredible performance, a decade from now, I think XRP will be worth far less than investors hope,” Rice said.
So, why exactly does Rice take a dim view of XRP’s future? The bull thesis for XRP has long rested on the idea that as banks embrace Ripple’s technology and products (Ripple is the company behind XRP), demand for XRP would surge and drive its price higher. However, the issue, says Rice, is that banks don’t actually need XRP to benefit from Ripple’s offerings.
RippleNet, Ripple’s “flagship product,” provides faster and cheaper transactions without requiring any use of XRP. Banks can continue using traditional currencies and still gain those efficiencies. Ripple’s ODL (on-demand liquidity) service does rely on XRP as a bridge asset for international transfers, but its adoption remains limited – mainly among smaller institutions where liquidity is a bigger concern, rather than the major banks that could “move the needle.”
Moreover, Rice sees a new competitive threat emerging from Ripple itself. The company’s push into stablecoins, he argues, risks undermining XRP’s very purpose within the ecosystem. Even if ODL adoption accelerates, Ripple’s newly launched stablecoin, RLUSD, could just as easily serve as the bridge asset for cross-border transfers, leaving XRP with a diminished role. And with Ripple pursuing a banking charter and spending $200 million to acquire a stablecoin payments firm, Rice believes the company is telegraphing where it sees its future – and it may not be one where XRP sits at the center.
Thus, Rice’s conclusion is a downbeat one: “In 10 years, I expect XRP to be a cautionary tale about mistaking a company’s success for its token’s value. While XRP’s price could gain in the short term, I think its returns will seriously lag the market over time.” (To watch Rice’s track record, click here)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.