The Ripple cross-border payment system is gaining momentum these days. That’s good news for investors in Ripple’s XRP(CRYPTO: XRP) token, which could soar to new heights if the tightly related payment network really takes off.
After a long spell of very low trading volume, followed by volatile action amid recent courtroom wins, XRP’s average market volume has settled at a historically high level. Its 24-hour trading volume stands at $1.7 billion on the afternoon of Monday, October 21, up from daily volumes as low as $500,000,000 in the summer of 2023.
That’s more than 5% of XRP’s tokens changing hands every day. By comparison, even volatile stocks rarely pass the 5% mark and the active volume for calm value stocks is often measured in fractions of a percentage point.
Traditional investors are paying attention, too. For instance, wealth manager and online influencer Jake Claver compares XRP and Ripple to Amazon.com(NASDAQ: AMZN). Amazon legitimized the idea of e-commerce in the 1990s and made millionaires out of many early investors. Likewise, Ripple looks ready to disrupt the international finance system with game-changing results for early token holders.
Claver imagines a world where Ripple manages the lion’s share of international payments someday — and also takes over other money-transfer settlement systems such as the stock market. In that world, the system could settle as much as $6.6 trillion of daily payment volumes and the XRP token would have to be worth about $132 to make that vision work. That would be a mind-blowing 23,900% above today’s XRP price, which stops at $0.55 per token.
This price target is quite extreme, of course. Claver presented it as a theoretical thought experiment, not a firm price target. How realistic is the proposed $132 target, though?
International money transfers of all types carried $160 billion of settlement fees last year. Market analysts like the Brainy Insights firm don’t even consider Ripple’s modest piece of that puzzle, focusing their reports on traditional systems such as Western Union, Visa, and the SWIFT overseas banking network.
So there’s a significant amount of money to be made, but it will take time to build a serious market presence here. And this relatively reachable opportunity is a tiny sliver of the trillion-dollar trading volumes Claver envisioned in a broader transactional network. So the $132 price target isn’t terribly realistic, at least not in the foreseeable future.
Still, Claver’s vision probably points in the right direction, and for plenty of good reasons.
In recent videos and social media posts, the wealth manager highlighted the following catalysts for a higher XRP price:
Several financial giants are going through the paperwork of creating exchange-traded funds (ETFs) based on XRP’s real-time spot price. Similar funds were approved for Bitcoin and Ethereum earlier this year, injecting billions of dollars of old-school capital into those crypto leaders. ETF liquidity could unleash much larger gains in XRP, given the smaller scale of this cryptocurrency today. This is where the billionaires will enter the XRP market in a big way.
The Securities and Exchange Commission’s (SEC) long-running lawsuit against Ripple Labs isn’t over yet, but should run its course over the next couple of years. The first few rulings have largely sided with Ripple, resulting in fines far below the billion-dollar payouts the SEC had requested. Putting that legal saga to bed should boost XRP’s real-world utility and token price.
Ripple Labs is a private company, but Claver argues that it could use a stock sale to raise operating capital and legitimize the XRP-based payments system. This is where he compares Ripple to Amazon, with potentially skyrocketing investor returns in the long run. A publicly traded version of Ripple would have deeper pockets for acquisitions and research, perhaps setting the stage for an Amazon-style business empire across several sectors and industries.
Moreover, the Ripple organization is investing heavily in the payment platform’s infrastructure right now. The system had about 400 automated market markers (AMMs) in the spring of 2024. The number of computerized liquidity managers doubled to 900 AMMs in early October — and doubled again over the last week to more than 2,500.
I’d be shocked to see XRP tokens priced at $132 any time soon. At the same time, the Ripple organization has lots of helpful balls in the air and the token does look undervalued today.
Claver’s ultra-bullish analysis underscored my investment thesis, even if I disagree with his long-term target price. XRP looks like a solid buy, and I’m happy to settle for a return far below 23,900%.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Anders Bylund has positions in Amazon, Bitcoin, Ethereum, and XRP. The Motley Fool has positions in and recommends Amazon, Bitcoin, Ethereum, Visa, and XRP. The Motley Fool has a disclosure policy.
