Shortly after Donald Trump won the presidential election on November 5th, the value of all cryptocurrencies in circulation surged to a new high of $3.9 trillion in December.
XRP (Cryptography: XRP)It was created in 2012 by a company called Ripple and was one of the best performers with a profit of 235% last year. Bitcoin (Cryptography: BTC) It also recorded an impressive 119% return, further strengthening its position as the world’s largest cryptocurrency.
However, 2025 has a rocky start in both. XRP is rising slightly annually, but is down 32% from its 52-week high starting in January. Meanwhile, Bitcoin began the year with a 14% decline. For investors who believe in the potential of cryptocurrency, the recent dip may spell an opportunity, but is XRP or Bitcoin a better purchase this year?
Image source: Getty Images.
Transferring money across borders can be slow and expensive. Networks such as Swift (Society for Worldwide Interbank Financial Communication) were established to help global banks communicate with each other and resolve transactions more quickly, but there is no overall solution yet, as not all financial institutions are on board.
Ripple created the Ripple Payments network to tackle that issue. No matter what infrastructure you use, it facilitates direct communication between banks. So you can resolve transactions in seconds rather than days.
Ripple created XRP tokens to standardize these transactions. For example, American banks can convert US dollars into XRP tokens and send those tokens to Japanese banks, eliminating currency exchange charges and other transaction costs (0.00001 XRP per transaction, or 0.000023 at the current price).
Ripple encountered a critical regulatory issue in 2020 and was sued by the US Securities and Exchange Commission (SEC). As Ripple controls the total supply of 100 billion tokens of 42 billion XRP and gradually releases them to meet demand, the SEC thought that crypto should be classified as financial security (e.g. stocks and bonds). If the SEC had won the courtroom, Ripple would have been forced to comply with a string of strict regulations, causing significant disruption to the business.
The lawsuit was largely resolved last August when a judge fined Ripple a $125 million, and found it merely security in a particular situation, such as when XRP was issued to the agency. However, if it is used in a transaction or traded on a crypto exchange, it may not be a judgment the investor deems a victory. The SEC appealed the decision, but there is growing speculation that the lawsuit could be withdrawn.
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That’s because the SEC’s acting chairman of Trump’s appointment recently began suspending the agency’s aggressive legal cases against other companies such as Crypto Exchange Binance and filed it to withdraw from another lawsuit against Binance Rival Coinbase Global. Ripple’s regulatory issues could vanish under this administration, which could lift the clouds hanging from the company and pave the way forward further with XRP.
Image source: Getty Images.
Bitcoin’s market capitalization of $1.7 trillion represents more than half of the value of all cryptocurrencies in circulation, at $2.8 trillion at the time of writing. It’s a speculative asset like most other coins and tokens, but more and more investors see it as a legitimate reservoir of value, like the digital version of gold, due to its unique qualities.
Bitcoin is completely decentralized, meaning it is out of control by people or companies. Its total supply is forever concluded with 21 million tokens, with about 19.8 million people currently in circulation, with the rest being “mined” between the present and 2140 years. Finally, the blockchain is a secure, fully verifiable system of record. Because of these features, Bitcoin does not conform to the definition of financial security, so the SEC actually approved cryptocurrency exchange trade funds (ETFs) last year.
Bitcoin ETF eliminates the need for investors to manage their own digital wallets. This is susceptible to hacking and often results in complete losses. As a result, ETFs are attracting new investors like financial advisors. Financial Advisors can give clients Bitcoin exposure in a safe and regulated way.
The approval of the ETF was one of the reasons why Bitcoin rose last year. Cathie Wood, who runs Ark Investment Management, believes ETFs can pave the way for institutional investors to ultimately park 5% of their assets in Bitcoin. This means a profit of around $85,000 to about 4,500% of Bitcoin’s current price.
In my opinion, that’s probably not realistic. However, if more investors treat Bitcoin as a storage of legitimate value over time, the more achievable price target could be $971,400. This will give Bitcoin a market capitalization of $20.4 trillion. This is the same value as the same mining as this writing. That means about 1,000% potential upside from where it is traded today, but this is still a great return.
XRP has interesting real-world use cases within the Ripple Payments network, which can be significantly more valuable in the long run. But there’s a catch. Financial institutions can also use XRP to trade in Fiat currency, so they do not need to benefit from instant payments through Ripple.
This means that XRP is primarily a speculative asset, like many other cryptocurrencies. This may be why, even after last year’s strong rally, it has not yet surpassed record since 2018.
Bitcoin, on the other hand, has a clear momentum, and investors aren’t the only ones who believe it’s a good value store. Earlier this month, Trump signed an executive order to establish a strategic Bitcoin sanctuary within the US government. It mainly holds that Bitcoin regulators have seized from criminal enterprises, but one day, waiting for Congressional approval, could pave the way for the government to become an open market buyer.
It’s another catalyst that can run even further upside down with Bitcoin. So I think it’s a better purchase than XRP this year (and later).
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Anthony di Pizio does not occupy any of the stocks mentioned. Motley Fool has Bitcoin, Coinbase Global and XRP positions, and is recommended. Motley Fools have a disclosure policy.
Better Buy in 2025: XRP (Ripple) or Bitcoin? Originally published by The Motley Fool
