Key Points

New regulatory clarity was expected to boost XRP prices significantly, yet that outcome has not materialized.
Established payment competitors are advancing in blockchain technology just as it gains broader adoption.
Value appears concentrated in fintech firm Ripple, now valued at $50 billion.
10 stocks we like better than XRP ›

What a difference a year makes. At this time last year, XRP (CRYPTO: XRP) appeared poised for substantial growth. XRP is now down 70% from those peaks and trades near the $1 level.

Adopting a contrarian view, could XRP merit closer examination? It fits the profile of an affordable cryptocurrency that might surge in the next market upswing.

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Regulatory clarity for XRP

For nearly five years, XRP operated under regulatory uncertainty due to a prolonged legal dispute between the SEC and Ripple, the firm behind the XRP token. Ripple resolved the matter last August, returning to normal operations.

Several positive developments have followed. New spot XRP ETFs debuted last year and achieved strong results. Even as investors withdrew from Bitcoin and Ethereum ETFs, they directed funds into XRP ETFs.

Image source: Getty Images.

This year has brought ongoing positive regulatory updates as Ripple expands its blockchain payments globally. Ripple obtained full Markets in Crypto-Assets (MiCA) licensing in Europe, allowing its products across 30 countries.

Additionally, Ripple stands to benefit from the new Digital Asset Market Clarity Act in the United States. This legislation could pass as soon as this summer, enabling further applications for the XRP ledger.

So why aren't investors enthusiastic about XRP?

Despite consistent positive developments, the XRP token has not risen in value. Several factors may explain this, starting with limited retail engagement.

XRP lacks excitement in its core functions, and new banking licenses alone do not generate enthusiasm. At the same time, traditional payment competitors are entering digital assets and blockchain, reducing XRP's distinct appeal.

Investors see value accruing mainly to Ripple, which they have valued at $50 billion. XRP token holders gain little from economic activity on the ledger, as many functions can now be handled by stablecoins.

Thus XRP may represent a value trap, appearing inexpensive for valid reasons. Even after the pullback, it may lack sufficient upside for 2026 investment. Other cryptocurrencies near $1 could offer better prospects.

Should you buy stock in XRP right now?

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Dominic Basulto holds positions in Bitcoin, Ethereum, and XRP. The Motley Fool holds positions in and recommends Bitcoin, Ethereum, and XRP. The Motley Fool maintains a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.