Fri, 12/06/2024 - 09:32
With the ascension of Donald Trump and the nomination of Elon Musk to head up a new Department of Government Efficiency (DOGE), it's understandably been a rollercoaster few weeks for the crypto market. Trump has famously pledged multiple times to "make America the crypto capital of the world", and the Tesla CEO and Dogecoin evangelist's credentials speak for themselves. However, while much of the attention garnered by this development has been focused on Bitcoin, Dogecoin and Shiba Inu, it's also been somewhat of a reawakening for the less fashionable Ripple (XRP), whose parent company has been quietly preparing to launch its own stablecoin.
Following rigorous testing of the XRP ledger in recent weeks, the latest data from the Ripple Stablecoin Tracker shows that the RLUSD Treasury minted 2,000,000 RLUSD on 3 December. With the New York Department of Financial Services (NYDFS) now expected to announce the approval of the RLUSD stablecoin, many investors are wondering what could happen to the company's flagship crypto, XRP, in the immediate aftermath and even beyond that. In this article, we'll look at two main factors that will drive interest in Ripple and its coins as we try to assess where it could be headed in 2025.
Speculate to accumulate
As with any major fundamental development in any marketplace, speculation will always occur and is likely to be a key driver of initial price action. This is, of course, especially true of the crypto space, but what happened with XRP over the past month has been surprising even by these standards. In just 25 days, XRP has gained over 370% and shows little sign of slowing down. Following the huge rally, Ripple (XRP) has overtaken Solana (SOL) and USDT to become the third-largest cryptocurrency by market cap.
With XRP now at its highest level since 2018, some may be wondering whether the unbound optimism might have to give way to some natural fear and a consequent correction. However, a new catalyst has now emerged that could lead to further growth for XRP: Ripple Labs' rumoured plans to use its 37.24 billion in XRP escrow reserves to back the minting of its RLUSD supply. It's also worth noting that even though there has been a level of retail speculation, the number of Ripple whales getting in on the action also suggests that the 'smart money' is backing an ongoing bull market in XRP, too. Indeed, data from Santiment indicate that wallets holding between 1 million and 10 million XRP have collectively acquired over 679.1 million tokens over the past three weeks.
Institutionalisation
One of the biggest trends in the digital assets market in recent years has been institutional adoption. However, up until now, this space has been dominated by Bitcoin and Ethereum. As of late, however, altcoins have been picking up momentum, and the launch of RLUSD should make Ripple even more attractive to this branch of investors. Ripple developed its stablecoin to handle cross-border payments, DeFi integrations, and liquidity management. Its established position in the market, coupled with the non-inflationary nature of its backing XRP cryptocurrency, should help it build trust within the financial industry. The Ripple Network is already used by countless financial institutions worldwide and offers the possibility to handle up to 1,500 transactions per second. On top of that, its transaction fees are highly competitive, making RLUSD a great fit for DeFi and dApps transactions.
Naturally, any market share gains for RLUSD will translate to increased demand for its native cryptocurrency, much like we saw with Tron and USDT. Finally, the launch of the new stablecoin comes just as the SEC case against Ripple looks set to fall apart. In July 2023, it was ruled that XRP ought to be classed as a security when sold to institutions and a huge $2 billion fine imposed. Now, former US Commodity Futures Trading Commission (CFTC) Chair Chris Giancarlo predicts that the case will ultimately be dropped under the new Trump White House after a series of appeals have already seen the fine reduced to $120 million. The launch of RLUSD then comes at a perfect time to supercharge institutional investment and extend XRP's good run into 2025.
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