XRP (CRYPTO: XRP) and Bitcoin (CRYPTO: BTC) advanced 565% and 410%, respectively, in the last three years. But certain Wall Street analysts expect the cryptocurrencies to climb even higher in the next few years:
Here’s what investors should know about XRP and Bitcoin.
The investment thesis for XRP centers on its ability to facilitate fast and cheap cross-border transactions. It is the native digital asset on the XRP Ledger, a blockchain created by fintech company Ripple to disrupt SWIFT (Society for Worldwide Interbank Financial Telecommunications), the system banks generally use to send money internationally.
XRP transactions settle in seconds and cost a fraction of a cent, but SWIFT transactions may not settle for days and often incur larger fees. Yet, very few financial institutions have adopted XRP as a bridge currency to facilitate cross-border payments. I doubt that will change in the future, because cryptocurrency prices are volatile. Why send money as XRP when its price could plunge in a very short period?
However, fast and inexpensive transactions mean that the XRP Ledger is also ideal for tokenized assets, a market that will hit $19 trillion by 2030, according to Ripple. Tokenized assets are real-world assets represented as digital tokens on a blockchain. For instance, Guggenheim Treasury Service recently tapped the XRP Ledger to issue digital commercial paper, a fixed-income security.
Greater adoption of the XRP Ledger increases demand for the native cryptocurrency, XRP, which could make the token more valuable over time. However, I see a bigger catalyst in the pending approval of several spot XRP ETFs. Bitcoin has gained 125% since the approval of spot Bitcoin ETFs in 2024, and XRP could see similar price appreciation.
The investment thesis for Bitcoin centers on its status as digital gold. Investors see the cryptocurrency as a hedge against inflation and the devaluation of fiat currencies like the U.S. dollar. In fact, the U.S. Dollar Index has declined 10% year to date, but Bitcoin has advanced 13%. That trend is likely to continue in the years ahead because, unlike fiat currencies, Bitcoin supply is limited.
