Ten years is an incredibly long time -- especially in the volatile crypto world. Want an example? If you bet $10,000 on XRP (XRP -0.17%) in early 2015, you would have a whopping $1.8 million today, assuming you could hold on through the ups and downs without selling. In this article, we will discuss whether XRP still boasts multibagger, long-term potential.
Institutional ownership is key
After more than a decade, clear trends are beginning to emerge in crypto performance. The long-term price charts of large mainstream coins like Bitcoin have trended up, consistently beating previous highs and staying above previous lows. This trend is encouraging because it suggests the asset is becoming a reliable store of value.
Bitcoin Price data by YCharts.
Bitcoin's performance starkly contrasts with meme coins like Shiba Inu, which continue to follow a boom-and-bust pattern with no clear trend line. The difference could lie in institutional ownership.
Large financial institutions, such as mutual funds, pension funds, and even insurance companies, have begun investing in blue chip cryptos. Unlike retail investors, these deep-pocketed entities are likely highly diversified and liquid, making them less likely to panic and sell their holdings based on the inevitable booms and busts. The result is more price stability and growth. While XRP is far behind Bitcoin, its institutional ownership could surge with regulatory wins and a potential exchange-traded fund (ETF).
The path toward an XRP ETF
An ETF is a bundle of assets that can be traded on exchanges like a regular stock. This process can benefit cryptocurrencies by making them more accessible to investors and institutions that might be uncomfortable with the asset class's peculiarities, such as digital wallets, addresses, transaction times, and fees.
So far, Bitcoin and Ethereum are the only cryptocurrencies that boast ETFs, likely contributing to their institutional adoption. However, XRP could be on track to join this prestigious club over the coming years. A slew of financial companies have submitted applications to the Securities and Exchange Commission (SEC) seeking permission to create XRP ETFs. These include digital asset manager Greyscale, whose application for a fund was acknowledged by the regulatory body this month.
Image source: Getty Images.
According to ETF.com, the acknowledgment triggers a 240-day review period, which means a final decision could be made by mid-October. The bad news is that XRP's developer, Ripple Labs, faces long-running litigation with the SEC over whether its previous token sales represented unlicensed sales of securities. Legal uncertainty could hurt the asset's approval odds until a resolution is reached.
That said, the lawsuit was launched under the SEC's former head, Gary Gensler. The agency's new acting chairman, Mark Uyeda, has a long history of disagreeing with Gensler's approach and has already struck a more dovish policy stance toward the industry that has involved pausing a lawsuit against crypto exchange Binance as it reworks its policy. This could be a good sign for the Ripple lawsuit.
Is XRP a buy during the next decade?
CRYPTO: XRP
Key Data Points
While it is impossible to predict the future in financial markets, XRP looks poised for substantial growth during the next decade. With a market cap of more than $150 billion, the asset is already quite large, so investors shouldn't expect a repeat of the explosive volatility of the past. But XRP looks positioned to enjoy steady growth as it moves further into the mainstream, overcomes its legal challenges, and attracts more institutional ownership.
