The entire cryptocurrency market has risen 24% since the November presidential election. Donald Trump embraced digital assets during his campaign, and his upward momentum has stalled in recent weeks, but some Wall Street experts still hope for a big profit from XRP (Cryptography: XRP) and Bitcoin (Cryptography: BTC).
Dom Kwok, a former Goldman Sachs employee and co-founder of blockchain education company Easya, said earlier this year that XRP has a good shot at replacing Ethereum as the second most valuable cryptocurrency. As of February 27th, Ethereum had a market value of $282 billion and XRP had a market value of $128 billion. So Kwok’s forecast now means at least 120% upside in XRP.
Tom Lee, managing partner and research director at Fundstrat Global Advisors, said late last year that Bitcoin could exceed $250,000 in 2025 as it helps the Spot Bitcoin Exchange-Traded Funds (ETF) and the president-elect administration justify cryptocurrency. As of February 27th, Bitcoin is trading at $86,000, so his prediction is the opposite of 190%.
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XRP is the native cryptocurrency of the Ripple blockchain, a platform built for cross-border payments and foreign currency exchange. Currently, most international payments are routed through the Swift (Interbank Financial Communications Association worldwide) system, but the process often involves intermediaries who spend the money and time on transactions.
Ripple designed what we believe to be a better system. Its blockchain uses XRP tokens as bridge currency to allow faster and cheaper payments. Currently, fewer than 200 financial institutions use the platform, but if the lawsuit with the Securities and Exchange Commission (SEC) is fully resolved, hiring could increase.
To elaborate, the SEC complained of ripples in 2020, claiming it sold XRP as unregistered security. In August 2023, a US district judge issued a split decision, finding that certain transactions were exempt, while others should have complied with the securities laws. As a result, Ripple was fined $125 million, well below the $2 billion the SEC wanted. However, the SEC has since appealed the decision.
Importantly, Ripple recently introduced a Stablecoin called Ripple USD (RLUSD). Its value is tied to the US dollar, providing businesses with a less volatile means of trading Ripple blockchain. However, since native cryptocurrencies are used to pay for RLUSD transactions, Stablecoin must continue to increase demand for XRP.
Finally, several asset managers submitted applications to the SEC to create the SPOT XRP ETF. These funds offer XRP exposures without the hassle and high fees associated with cryptocurrency exchanges. Bitcoin has earned over 80% since the SEC-approved Spot Bitcoin ETFS in January 2024, and XRP could generate similar returns.
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The final result is as follows: I think XRP will double in 2025, but only if Ripple resolves legal issues with SEC and SPOT XRP ETFS approval. Furthermore, the Bank of Japan recently adopted XRP for cross-border payments. This should further justify its role in the financial system. Investors who are happy with risk and volatility should consider buying a very small position today.
Bitcoin’s market capitalization is $1.7 trillion, making it the most valuable cryptocurrency. It has also become increasingly popular with retail and institutional investors since SEC-approved Spot Bitcoin ETFS last year. These funds raised a net inflow of $37 billion in 2024, with BlackRock’s Islands Bitcoin Trust being the most successful ETF launch in history.
Bitwise Chief Investment Officer Matt Hougan pointed out last year that institutional investors have adopted Spot Bitcoin ETFs at the “fastest rate for any ETF in history.” In fact, the recently filed Form 13F shows that more than 1,100 asset managers at ISHARES Bitcoin Trust have held positions up from 600 in the second quarter.
This trend is particularly important as institutional investors have assets under management (AUM). Even a small portion of that total allocated to Bitcoin can increase the price much more. BlackRock CEO Larry Fink recently said that if he invests 2% to 5% of AUM in Cryptocurrency, Bitcoin could reach $700,000.
Importantly, in November 2024, Tom Lee predicts that Bitcoin will exceed $250,000 within 12 months. However, he also said that cryptocurrency could immerse in $65,000 before it returns to $250,000. The first half of his predictions appears to be rolling out in the market now. Bitcoin hit a record high of $109,000 earlier this year, but then fell 21% to $86,000.
The bottom line is: I’m skeptical that Bitcoin will reach $250,000 in 2025, but I think it’s more valuable in the future. Patient investors who are happy with volatility and risk can buy small positions today. Allocating the 2% to 5% range of a portfolio is wise.
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Trevor Jennewine has no position in any of the stocks mentioned. Motley Fool has positions at Bitcoin, Ethereum, Goldman Sachs Group and XRP. Motley Fools have a disclosure policy.
According to Wall Street experts, the two top cryptocurrencies can be purchased before they rise 120% and 190%.
