In July of last year, XRP experienced a notable surge in value, reaching $3.65 per token, its highest price point since 2018. This increase followed Ripple, the parent company of XRP, resolving a lengthy five-year legal dispute with the U.S. Securities and Exchange Commission (SEC). The litigation, initiated in 2020, alleged that Ripple violated financial securities regulations, casting uncertainty over its operating model and suppressing XRP's market price.
The settlement was part of a broader regulatory approach under President Donald Trump's administration, which sought to ease cryptocurrency industry regulations to foster innovation. Despite these positive indications, XRP's market value has declined by almost 50% from its peak last July.
The diminished price performance suggests that the legal resolution, while removing a key obstacle, does not address fundamental issues intrinsic to XRP's structure and use cases, potentially limiting positive momentum beyond current levels. An analysis of XRP's role within Ripple Payments and market dynamics provides insight into its prospective performance through 2026.
XRP's Intended Function in Cross-Border Payments
Ripple has developed a payment network, Ripple Payments, designed to facilitate near-instantaneous global bank transfers while reducing reliance on intermediaries. This system aims to expedite transaction times significantly and decrease the associated costs.
Traditionally, when a bank in the United States sends funds to a bank in Europe, the funds transfer in U.S. dollars, which the European institution subsequently converts to euros. This conventional process can incur exchange fees that exceed 4.85% of the transaction value. Ripple Payments introduces XRP as a bridging currency between these institutions, with transfer fees as low as 0.00001 XRP, a minuscule fraction of a cent, thereby substantially lowering costs.
In theory, increased adoption of Ripple Payments by banks would elevate demand for XRP tokens, supporting their price. However, this relationship is not straightforward for several reasons.
Key Structural Limitations Affecting XRP Demand
- Non-exclusive Use of XRP for Transactions: Banks using Ripple Payments are not obligated to utilize XRP, as the network supports fiat currency transfers as well. This weakens the direct correlation between the payment system's growth and XRP token demand.
- Short-term Holding and Conversion: Bridge currencies like XRP are typically held only briefly. For instance, a European bank receiving XRP from its U.S. counterpart would likely convert the tokens immediately into euros, balancing out buying and selling pressure without creating lasting demand.
- Competition from Stablecoin Solutions: In late 2024, Ripple introduced Ripple USD (RLUSD), a dollar-backed stablecoin with minimal volatility, likely more appropriate for bridging payments than XRP, which is subject to significant price fluctuations that could expose banks to risk during short holding intervals.
These aspects collectively help explain XRP’s recent price decline and suggest continuing downward pressure could prevail throughout 2026.
Market Performance and Outlook Through 2026
Following its record peak in 2018, XRP experienced a precipitous drop exceeding 90% within six months. Despite Ripple Payments having expanded since then and the broader crypto industry enjoying greater support, a decline of comparable scale might be less rapid this time.
External factors, such as reduced investor interest in cryptocurrencies and general market downturns affecting major coins like Bitcoin, have also impacted XRP's performance. Since XRP's primary demand driver—usage within Ripple Payments—is unreliable, speculative trading will likely influence its valuation moving forward.
Consequently, XRP may encounter significant volatility during adverse market periods, potentially triggering sharp price declines. While a downturn as steep as in 2018 may not happen imminently, a further price decrease of roughly 50% this year is plausible, placing XRP around $1 per token by the end of 2026.