Ripple's XRP Token Grew 5 Times in One Month. Why did this Happen?

In November, Ripple's cryptocurrency posted the fastest growth among the major crypto assets in the market. What is the reason for so much enthusiasm around XRP and what risks might such rapid growth entail?

The XRP token, supported by Ripple Labs, has outperformed almost all of the top 100 largest crypto assets by capitalisation in terms of price growth in one month. The rapid growth over the past 30 days, surpassing 400%, is linked to investors' positive expectations regarding cryptocurrency regulation in the US.

The price of the cryptocurrency XRP (XRP) has increased by more than 430% in the past month, rising from $0.5 to $2.7, reaching its highest value since 2018. XRP managed to become the third largest cryptocurrency by capitalisation, surpassing Solana and the USDT stablecoin of Tether. As a result, XRP has overtaken Bitcoin in terms of growth over the past month by almost 400 percentage points. Only a month ago, XRP occupied seventh place in the ranking of the 100 largest crypto assets with a capitalisation of $28.5 billion.

As of 2 December, XRP's capitalisation amounted to over $154 billion. On a monthly basis, this cryptocurrency asset outperformed almost all cryptocurrencies on the list of the 100 largest projects, according to Coinmarketcap. The absolute maximum price of XRP was recorded at around $3.3 in January 2018.

The growth of XRP began almost immediately after Donald Trump's election as US President on 5 November. In addition to the overall growth in capitalisation in the cryptocurrency market, the enthusiasm around Ripple and XRP was associated with a specific election promise by Trump to 'immediately fire' the current head of the SEC, Gary Gensler, by early December.

In late November, the SEC chief announced that he would step down on 20 January 2025, the day of Donald Trump's inauguration. Afterwards, XRP rose almost without correction from around $1.1 to $2.7 on 2 December, according to Coinmarketcap.

Hopes for Ripple

Combined with price growth and investor expectations of a new pro-cryptocurrency policy from US authorities under the Trump administration, market data shows increased activity in the XRP market.

Trader activity on the US exchange Coinbase has been particularly highlighted. According to the head of analytics platform CryptoQuant, Ki Young Ju, the price premium on Coinbase compared to other cryptocurrency exchanges has ranged from 3% to 13% over the past month. This could be a sign of growing demand from American investors.

"Americans, who were previously reluctant to buy the asset, are now entering the market and buying it. It is also important to consider that the project is planning to launch its own stablecoin, which could be backed by the tokens. All this has worked in the project's favour,"

said Vagiz Nurullov, managing partner of the VG GROUP financial group.

A key factor in the emergence of such an asset, according to Nurullov, could also be the project's country of origin: "Ripple is an American project, and crypto projects in the US will now have the greatest attraction for investment activity."

Various investment companies have also shown interest in XRP in terms of launching cryptocurrency-based exchange-traded products (ETFs). For example, in early December, WisdomTree, an issuer of an ETF on bitcoin, submitted a request to launch a similar fund for the cryptocurrency XRP. Previously, a similar request had been submitted by Bitwise, also an issuer of an ETF on bitcoin.

The Risks

The rapid rise in the price of XRP is reminiscent of the situation in January 2018, when the price of XRP reached its all-time high of $3.3. Since then, not even during the peaks of 2021, when Bitcoin first reached $69 thousand, has the price of XRP risen above $1.6.

At the same time, in 2018, XRP ousted Ethereum from its position as the second largest cryptocurrency by capitalisation, as reported by Coinmarketcap data. Significantly, after XRP's growth in those days, the entire cryptocurrency market began to decline, a trend that continued until 2020.

The growth of XRP in 2018 even led to the fact that the project's fully diluted valuation (FDV) briefly exceeded Bitcoin's capitalisation. In early January 2018, Bitcoin's capitalisation was almost $300 billion, while XRP's FDV exceeded $330 billion.

Experts also warn of the possibility of a correction.

"It is definitely not worth buying the currency at current prices; one should wait for a noticeable correction towards the buying levels of large investors, in the region of $1.4,"

wrote Dmitry Savintsev, analyst at the Cryptorg trading platform.