Is XRP (Ripple) About to Plunge by 90%? History Paints a Very Ugly Picture.
Key Points
XRP was created to standardize transactions in the Ripple Payments network, so it has a real use case.
But the token faces structural issues, which is why it has plummeted by 60% from last year's record high.
History suggests more losses could be ahead for XRP investors.
The cryptocurrency market isn't doing so great right now. The combined value of all coins and tokens in circulation is down 36% from last year's peak, as investors trim their exposure to highly speculative assets in favor of stocks and other alternatives.
The XRP (CRYPTO: XRP) cryptocurrency is faring even worse than most of its peers. It was designed to standardize transactions in the Ripple Payments network, so it has a true real-world use case capable of creating value over the long term, but the token has plummeted by 60% since setting a new all-time high last July.
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XRP is contending with a series of structural issues that will be difficult to overcome, so it could face further downside. In fact, history suggests it could plunge by 90% from its recent price of $1.48, and here's why.
Image source: Getty Images.
XRP's real-world utility is under threat
Not every global bank uses the same payment infrastructure. Some use the SWIFT network (short for the Society for Worldwide Interbank Financial Telecommunication) while others don't, so they have to use intermediaries when sending money to one another, delaying payments and adding costs.
Ripple created Ripple Payments so banks could communicate with one another directly for the purpose of settling transfers, no matter what existing infrastructure they use. This process eliminates intermediaries, resulting in instant transfers with negligible costs. The banks can elect to use XRP when transacting, which also removes expensive foreign exchange fees. In fact, the cost of an XRP-based transfer is typically about 0.00001 tokens, or a fraction of one U.S. cent.
Investors believe XRP will increase in value as more banks and institutions use Ripple Payments, which makes logical sense. However, Ripple Payments also supports the use of fiat currencies, so banks can still benefit from instant cross-border transfers even without using the cryptocurrency.
Ripple also launched its own stablecoin in 2024, called Ripple USD (CRYPTO: RLUSD). Stablecoins are designed to maintain a constant value with zero volatility, so they're better suited for money transfers than traditional cryptocurrencies. XRP can experience wild swings in value on a daily basis, exposing banks to losses even during brief holding periods.
With that said, Ripple USD was built on the XRP Ledger, so any fees associated with using the stablecoin are still payable in XRP tokens. That means demand for XRP won't evaporate entirely, even if the token is completely displaced in the payments landscape.
Is a decline of 90% possible from here?
Since Ripple issues XRP, its fate is closely tied to the company's success. For example, it isn't decentralized as Bitcoin (CRYPTO: BTC) is. Bitcoin will never be controlled by any person, company, or government. XRP's comparative vulnerability will occasionally raise questions among investors and weigh on its value.
Back in 2020, the U.S. Securities and Exchange Commission sued Ripple, claiming that XRP should be classified as a financial security, just like stocks and bonds, which are also issued by companies. The result would have imposed restrictions on Ripple's business, and so investor sentiment was rattled, which kept the price of XRP suppressed below $1 for several years.
The SEC agreed to settle the case in 2025 as part of the Trump administration's pro-crypto policy agenda, which catapulted XRP to $3.65 per token, marking its first new record high since 2018. But its 60% decline from the recent peak is reminiscent of its fall from grace after 2018. On that occasion, the token plummeted by more than 95% and had set a low of $0.15 by March 2020.
I think history could repeat, given some of the headwinds I've highlighted, especially the rise of stablecoins, which could make XRP redundant as a bridge currency in Ripple Payments. XRP would have to sink by 90% from its current price of $1.45 to match the post-2018 low, and it certainly appears to be trending in that direction right now.
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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and XRP. The Motley Fool has a disclosure policy.
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