There's no doubt that President-elect Donald Trump's victory on election night was a major catalyst for crypto in the year's final months. Bitcoin (BTC), the world's largest cryptocurrency, surpassed $107,000 at one point this year, while other cryptocurrencies have soared as well. After underperforming the sector for several years, XRP (XRP) zoomed higher and is now up over 334% since election night. Trump has promised to remove roadblocks for the sector, promote growth, and make the U.S. the crypto capital of the world. Should you buy XRP before Trump is sworn into office on Jan. 20?
Regulatory relief
Few cryptocurrencies have more to gain from a Trump presidency than XRP. The crypto sector has faced regulatory headwinds over the last several years from regulators like the Securities and Exchange Commission (SEC). There have also been a lot of regulatory gray areas, making it hard for crypto companies and investors to move forward with certainty. XRP has arguably been the SEC's poster child in the agency's attempts to gain more regulatory jurisdiction over cryptocurrencies, which it believes should be treated as securities because most people buy them as speculative assets. Crypto proponents hoping to avoid strict securities laws would prefer cryptocurrencies to be treated as currencies and overseen by the Commodity Futures Trading Commission (CFTC).
Led by current Chair Gary Gensler, the SEC sued Ripple, the company behind XRP, as well as co-founder Christian Larsen and CEO Brad Garlinghouse, for selling XRP tokens as unregistered securities in 2013. In 2023, a federal judge ruled in the defendants' favor but then the SEC appealed parts of the decision, keeping the limelight on XRP. However, Gensler will step down once Trump takes office. The SEC must file its opening brief for the appeal by Jan. 15.
Trump has nominated former SEC commissioner Paul Atkins to lead the SEC. Atkins is pro-crypto, having recently worked for a crypto advocacy firm. Some also think Atkins, if approved by Congress, could settle or dismiss the lawsuit against Ripple, Larsen, and Garlinghouse. This would finally get XRP out of the SEC's crosshairs and pave the way for an XRP exchange-traded fund (ETF) in 2025.
The SEC under Gensler approved spot Bitcoin and spot Ethereum ETFs in 2024, which proved to be big catalysts for both tokens because they made it easier for the general public to invest in cryptocurrencies and for large brokerages and asset managers to offer investments to clients. Once Trump becomes president and implements a pro-crypto administration, I expect more cryptocurrencies to get spot ETFs and for more brokerages like Robinhood Markets to be able to sell a wider variety of cryptocurrencies. First, though, XRP needs to put the SEC lawsuit behind it, so regulators do not have to contend with any question over XRP being unregistered security.
Should you buy XRP Before Jan. 20?
After such a phenomenal run in roughly two months, it's clear the market is pricing in some of these events such as the SEC lawsuit being put to bed and a high probability of an XRP ETF in 2025. Some companies planning to offer them have already started the paperwork.
Still, uncertainty persists. Remember, many of Trump's pro-crypto nominations still need to be approved by the Senate. Additionally, the Republicans only hold a razor-thin majority in the U.S. House of Representatives, making passage of legislation over a wider regulatory crypto framework and stablecoins by no means a guarantee. Treasury yields have also zipped higher recently, which usually does not benefit most cryptocurrencies. Some of these issues could certainly move in crypto's favor, though, so I think there are still catalysts to be had in 2025 for the crypto sector and XRP.
I'd recommend a small speculative position in XRP right now. The token has potential, but is volatile. It's likely to experience higher gains than Bitcoin in a bull crypto market but also more severe losses if Bitcoin declines.
