Cryptocurrency investors have much to celebrate in 2024. The total market capitalization of all cryptocurrencies has surged to $3.5 trillion, more than doubling from its end-of-2023 figure. Leading the charge is Bitcoin (BTC 4.02%), which has played a significant role in this impressive growth. Interestingly, even XRP (XRP 1.89%), which faced regulatory scrutiny for a long time, has soared by 250% this year.
The drop in interest rates has sparked a surge in demand for growth-centric assets like stocks and cryptocurrencies. There’s also speculation that an incoming Trump administration could be more favorable towards crypto than its predecessors, potentially opening doors to fresh opportunities for the industry.
So, as we gaze into 2025, will XRP emerge as a better buy compared to Bitcoin?
The case for XRP is compelling. Global banking transactions are often a painful process, taking days to complete. Numerous financial institutions rely on the SWIFT payment network, but not all do, requiring intermediaries for each transaction. Ripple, a pioneering company, aims to simplify this. Its Ripple Payments network connects seamlessly with existing banking systems, enabling instantaneous settlements between financial institutions.
To facilitate these transactions, Ripple introduced the XRP token. For instance, instead of routing traditional dollars, an American bank can send XRP to a Japanese bank, effectively bypassing currency exchange fees. The two banks can then convert the XRP into their local fiat currencies.
Currently, there are 100 billion XRP tokens total, with 57 billion in circulation. Ripple retains the remaining 43 billion, releasing up to 1 billion monthly to meet institutional demand. However, Ripple faced a legal battle when the SEC sued them over whether XRP should be classified as a security, placing heavy restrictions on its operations.
As of August 2024, some clarity emerged: Ripple was fined $125 million, but it was determined that XRP is only a security under certain conditions, particularly when sold to institutions. Although the SEC is appealing this decision, news of Paul Atkins, a pro-crypto figure, being nominated to lead the SEC has instilled hope that Ripple’s legal hurdles could soon vanish.
After November’s elections, XRP witnessed a significant price increase. As of now, it trades at $2.21, a far cry from its peak of $3.40 in 2018. While there’s potential for growth, keep in mind that XRP is still a speculative asset.
Now, let’s switch gears to Bitcoin. Unlike XRP, Bitcoin isn’t linked to any company and has a capped supply of 21 million, with 19.8 million currently in circulation. This limited supply means Bitcoin hasn’t encountered the same regulatory issues as Ripple. The SEC even approved multiple Bitcoin ETFs this year, providing a regulated avenue for institutional investors. This burgeoning industry boasts over $110 billion in assets.
Bitcoin has a solid track record of reaching new highs, even after market corrections, unlike many lesser-known cryptocurrencies. Its scarcity and decentralized nature have led investors to view it more as a reliable store of value.
Some analysts liken Bitcoin to a digital gold, which currently holds a market capitalization of $1.9 trillion compared to gold’s whopping $17.7 trillion. This suggests Bitcoin would need to appreciate by 831% just to catch up to gold, hinting at a possible future price of about $893,000 per coin.
Adding to the excitement, Michael Saylor, co-founder of MicroStrategy and an ardent Bitcoin supporter, forecasts that Bitcoin could climb to $13 million per coin by 2045. He believes that the U.S. will implement a framework for digital assets, spurring widespread adoption. However, reaching that price appears quite ambitious, especially considering it would equate to a market cap of $257 trillion.
Looking at both sides, XRP offers innovative solutions via Ripple Payments, but banks aren’t obligated to adopt it, which could temper XRP’s price growth. This makes XRP a speculative cryptocurrency, with unpredictable future movements.
On the flip side, while Bitcoin is not without its speculation, it has established itself as a sound store of value through the years. Its growing acceptance among institutional investors and the ease with which they can now invest in it via ETFs further amplify its attractiveness.
Taking everything into account, Bitcoin appears to present a stronger chance for upside potential in 2025 compared to XRP. Its established position as a store of value makes it a more secure option for investors looking to build wealth in the coming years.
