Should you buy XRP when its price is under $3?

Amidst the surrounding excitement BitcoinThe recent surge exceeded $100,000, such as altcoins Solana, Cardanoand Dogecoin They enjoyed their own walks. There is clear excitement in the world of cryptocurrency investing.

XRP (XRP 0.57%) In particular, it has received a lot of attention for rising nearly 400% since early November. Encryption It briefly traded above $2.70 before falling back to current levels of around $2.30. Why the increase? And should you buy XRP while it’s trading for less than $3?

The election results were welcomed by many XRP enthusiasts

Bitcoin and the entire market reacted very positively to Donald Trump’s victory in the presidential election in November. This is because the president-elect made a series of pro-crypto statements throughout the election campaign which included his intention to make America the “crypto capital of the planet.”

While many cryptocurrencies stand to benefit from a second Trump presidency, Ripple (XRP) may be among the coins to receive the biggest boost. The coin caught the attention of regulators under the Biden administration, which claimed its sale violated securities laws, and in 2020, the digital currency was issued. Securities and Exchange Commission I filed a lawsuit.

Trump’s SEC is likely to be more friendly towards XRP; The president-elect will replace current SEC Chairman Gary Gensler with Paul Atkins, a clearly pro-crypto pick. Although the XRP lawsuit began under Gensler’s predecessor, he has continued to pursue it, taking an aggressive stance toward XRP and the industry as a whole.

Last year, XRP received good news about the SEC lawsuit. A judge ruled in favor of the cryptocurrency, and now that Gensler is on his way out, the SEC is unlikely to move forward with the appeal.

The regulatory future for XRP is becoming clear, but is it enough?

A more friendly SEC is certainly great news for XRP, and if the SEC does confirm that it is not seeking an appeal, I think the price of XRP will likely rise. However, I’m not convinced it has long-term value.

The main value of XRP is that it makes banking and financial transactions fast and cheap. The methods currently used to transfer money have generated fees of up to $193 billion in 2023. But the banking industry is unlikely to change its practices for one big reason, even though Ripple (XRP) is significantly cheaper.

Even if XRP were used by the entire industry, the annual revenue from those transactions would be a small fraction of the $193 billion. This makes XRP’s current market capitalization of over $130 billion seem unrelated to its inherent value.

The other main argument for the coin’s continued appreciation is that as financial institutions adopt this technology, they will have to purchase huge amounts of XRP to transact on the network. This would lead to higher demand and thus higher value. The problem here is that in most cases, banks do not have to use XRP themselves to use the XRP network. If the bank can use other currencies instead, it will do so. Banks also do not like to hold large amounts of volatile assets such as XRP.

Although XRP could benefit from some short-term catalysts, I doubt its value in the long term. The price will likely rise to $3 or higher, but I don’t think it will hold above that in the long term. For this reason, I will not buy XRP at its current price.

If you are interested in investing in cryptocurrencies, I think there are much better alternatives. Bitcoin is my choice For a digital asset that has a real chance of beating the market for years to come.