Two Analysts Assess XRP’s Explosive Rally

XRP has emerged as the biggest beneficiary of President-elect Donald Trump’s pro-cryptocurrency promises, 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 the broader crypto market’s 93% gain, as measured by the CoinDesk 20 Index. The massive rally has seen 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 changing regulatory sentiment. “The asset that has been at the forefront of Peloton and has been through the regulatory hoops has been XRP,” Hougan told CNBC. “So if we move to regulatory enablers, almost by definition, it should benefit the most, that seemed like a rational response.”

XRP’s supporters see the rally as a vindication after Ripple’s protracted legal battle with the Securities and Exchange Commission (SEC). Last summer, a judge ruled that XRP was not a security when sold on exchanges to individual investors, but was considered an unregistered security when sold to institutional investors.

Founded in 2012, XRP is the 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 faced skepticism about its market potential. Alex Thorn, head of research at Galaxy Digital, referred to XRP as a “blast from the past” and criticized its lack of clear product-market fit. “Despite a lot of marketing, there’s never been a clear product-market fit,” Thorn said, adding that XRP trades at valuations “well above some of the larger companies” without significant real-world use cases.

While XRP’s critics 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 cost-effective than Bitcoin’s proof-of-work or Ethereum’s proof-of-stake systems. Hougan also praised XRP’s ability to maintain community interest throughout crypto’s boom and bust cycles.

*This is not investment advice.