XRP has emerged as the biggest beneficiary of President Donald Trump's pro-cryptocurrency pledges, sparking a massive rally that has left investors debating its future direction.
Since the election, XRP has surged 370%, outpacing Bitcoin's 46% rally and a 93% gain in the broader crypto market, as measured by the CoinDesk Index 20. The massive rally has Seeing XRP surpass Solana to become the third largest cryptocurrency by market cap.
Matt Hougan, chief investment officer at Bitwise Asset Management, attributes XRP's rise to a change in regulatory sentiment. “XRP is the asset that has been at the forefront of Peloton and has been through the regulatory hoops,” Hougan told CNBC. “So if we move to regulatory enablers, almost by definition, it should be the most beneficial, that seemed like a reasonable response.”
XRP supporters see the rally as a vindication after Ripple's long legal battle with the Securities and Exchange Commission (SEC). Last summer, a judge ruled that XRP was not a security when it was sold on exchanges to individual investors, but it was considered a non-registered security when to sell to institutional investors.
Founded in 2012, XRP is a native token of Ripple's XRP Ledger, an open source blockchain that Ripple leverages for its cross-border payments business, 95% of which operates outside the US.
Despite its technological advantages, XRP has been questioned about its market potential. Alex Thorn, head of research at Galaxy Digital, described XRP as a “blast from the past” and criticized its lack of product market fit. “Despite a lot of marketing, there was never a clear product market fit,” Thorn said, adding that XRP trades at valuations “well above some of the bigger companies” without real use cases in the the world
While critics of XRP say it has not seen enough adoption in business applications, supporters like Hougan highlight its unique consensus mechanism, which is less energy intensive and more efficient. regarding the cost of the Bitcoin proof-of-work or Ethereum proof-of-work systems. Hougan also praised XRP's ability to sustain community interest through cycles of crypto growth and decline.
* This is not investment advice.
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