In the immediate aftermath of Trump’s November election win, cryptocurrencies surged and hardly any more so than Ripple (XRP). The cross-border payments-focused coin added 550% in value over a 10-week period and there’s a fairly simple explanation for the humungous returns.
Trump’s win was seen as a real boon for the space given his about-face on all things crypto and the fact his new administration was about to be peopled with pro-crypto members. That represented a big change from previous administrations, which had been either hostile or withering at best toward Bitcoin (BTC) and its fellow cryptocurrencies.
For Ripple, this was particularly important given it had been embroiled in a multi-year lawsuit with the SEC, which had alleged Ripple Labs had sold XRP as an unregistered security. At the time, the SEC was headed by crypto foe Gary Gensler, and he announced his resignation following Trump’s win. Hopes were high, then, that the SEC would drop its case against Ripple. Lo and behold, that’s what happened eventually, so investors could breathe a sigh of relief with all the regulatory uncertainty finally out of the way.
So, that all worked out as planned. But with that big catalyst now gone, why would investors want to invest in XRP right now?
Well, top investor Dominic Basulto, who is among the top 2% of TipRanks’ stock pros, thinks there is one reason that shouldn’t be slept on. In December, Ripple introduced a stablecoin named Ripple USD (RLUSD). Similar to other stablecoins, it is backed 1:1 by the U.S. dollar and is mainly designed to help institutional investors participate in decentralized finance (DeFi).
Since its launch, Ripple’s stablecoin has experienced explosive growth. It is already ranked in the top 250 cryptocurrencies, boasting a market cap of $293 million. Ripple CEO Brad Garlinghouse believes the stablecoin has the potential to become one of the top five stablecoins by the end of the year.
Currently, the fifth-largest stablecoin has a market cap of $2.5 billion. If Ripple’s stablecoin reaches that level, it would represent almost a 750% increase in value over the next nine months.
But Basulto tries to imagine an even more ambitious scenario. The total stablecoin market is now valued at over $200 billion. If Ripple’s stablecoin manages to capture 10% of that market, its valuation could soar to $20 billion – representing a 67x increase from its current market cap.
Is all of that possible or just a pipe dream? Basulto concedes that Ripple’s stablecoin faces stiff competition from the likes of PayPal USD and the Trump family’s own planned stablecoin offering. Moreover, it’s far from guaranteed the stablecoin will have a positive impact on the institutional adoption of XRP.
Nevertheless, Basulto thinks it has the potential to be a game-changer for XRP.
“If Ripple can inject itself into the current stablecoin narrative, it could have huge implications for the price of XRP going forward,” the 5-star investor summed up. “If you’re looking for a surprising reason to invest in XRP, stablecoins could be the answer.” (To watch Basulto’s track record, click here)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.