Should You Buy XRP While It’s Below $1?

If you are thinking of investing in XRP (XRP -4.30%)there are significant reasons for concern. XRP is still trading below $1 despite its epic four-year court battle with the SEC ending in August. The big jump that many investors expected never materialized, and XRP remains one of the few top cryptocurrencies to be down for the year.

The good news is that there is a brand new catalyst for XRP that could have a huge effect on the long-term price trajectory. As a result, it may not be time to ditch XRP just yet. Let’s take a closer look.

A spot ETF for XRP?

right now Bitcoin (BTC -2.18%) and Ethereum (ETH -3.58%) are the only cryptocurrencies that have spot ETFs. However, that hasn’t stopped investors from speculating what crypto could be next to an ETF. One of the most likely targets is XRP, given that it ranks seventh among cryptocurrencies by market capitalization and has a track record dating back more than a decade.

That’s why a recent move by Grayscale is so important. In mid-September, the investment firm announced the launch of the new Grayscale XRP Trust. Obviously, a trust isn’t the same as an ETF, but it’s arguably as close as you’re going to get with smaller crypto assets right now. There are downsides, of course. For example, the XRP trust will only be open to accredited investors and will trade over the counter. Thus, ordinary everyday investors will not have access to it.

But here’s the thing: Grayscale used a similar approach to launch spot ETFs for both Bitcoin and Ethereum. So the thinking is that the Grayscale XRP Trust could be the prelude to an eventual XRP ETF launch. As with Grayscale’s Bitcoin trust, a conversion process will be required. But with a little financial alchemy, it’s possible to turn a trust into an ETF.

Image source: Getty Images.

Thus, it is not entirely out of the question that we could see the launch of a spot ETF for XRP sometime in 2025. On the news of the launch of the XRP trust, the price of XRP rose by almost 9%. Of course, XRP is still trading at just $0.60, so we’re not talking skyrocketing value just yet. But there is growing attention that the price of XRP could reach $10 if a new ETF product comes to market.

How realistic is the ETF scenario?

The only problem, of course, is that a new ETF will require SEC approval. Right now, Ripple Labs (the company behind the XRP token) is not out of the woods when it comes to its battle with the SEC. It now looks increasingly likely that the SEC will appeal the case, which theoretically ended in August. If this happens, all bets are off.

In many ways, the XRP case has become a test case for crypto. It boils down to a very fundamental question: Is XRP a cryptocurrency or a security? Thus, what happens to XRP has the potential to affect every other cryptocurrency in the future. That’s why the stakes are so high and why the case has dragged on for nearly four years.

In August, the SEC won a partial victory, with the court ruling that XRP is a security when sold to institutional investors. As a result, Ripple Labs will have to pay $125 million in penalties. But the court also ruled that XRP is not a security when sold to retail investors. So if it decides to appeal, the SEC could be looking for a way to get a total victory over XRP rather than a partial victory.

Take the long view with XRP

The future of XRP is very much intertwined with the future of crypto regulation in the United States. That’s why XRP investors need to keep a close eye on what’s happening in Washington, D.C. Every time there’s talk of replacing Gary Gensler, the current head of the SEC, with a more pro-crypto regulator, that’s probably good news for XRP. For example, the latest speculation is that billionaire Mark Cuban, known for his pro-crypto views, could become the next head of the SEC.

With so many questions and concerns swirling around XRP right now, it’s hard to be optimistic in the short to medium term. However, if you take the long view and are optimistic that a new pro-crypto regulatory regime will soon come to Washington, then a relatively small investment in XRP today could pay big dividends tomorrow.