The price of Ripples cryptocurrency, XRP, is up over 300% in a month, rising almost 1,000% from a level of $0.22 in early 2021 to $2.37 now. In fact, thanks to its recent rally, XRP has become the fourth largest cryptocurrency in the world with a market capitalization of around $135 billion – after Bitcoin, Ethereum and Tether. Notably, XRP’s gains dwarf the incredible 200% returns that AI flagship NVDA’s stock has achieved so far this year (Sell Nvidia shares, buy Intel shares?)

XRP’s rise reflects the trend seen across cryptocurrencies after Donald Trump won the US presidential election, as hopes that the new administration will take a friendly stance towards digital currencies sparked unprecedented interest in them . Finally, at one of his rallies, Trump said he would make the US the “crypto capital” of the world. This has seen the most popular cryptocurrency, Bitcoin, surpass $100,000 for the first time ever – more than doubling from the $44,000 level earlier in the year.

Ripple is a digital payment network that uses its cryptocurrency XRP to enable fast and low-cost international money transfers. For Ripple, it is not just the Trump factor that is driving the development of XRP. Back in 2020, the US Securities and Exchange Commission (SEC) claimed that Ripple raised more than $1.3 billion in 2013 by selling XRP to investors in an unregistered securities offering. Ripple stated that XRP should not be treated as a security. In 2023, the court ruled that XRP was not a security when sold to the public on an exchange and that it did not violate federal securities laws. However, the court also ruled that XRP is a security when sold to institutional investors. This mixed verdict led the SEC to seek a $2 billion fine against Ripple. However, this did not go the SEC’s way, and the court instead imposed a $125 million penalty. A few months ago, a judge denied the SEC’s request to appeal the ruling.

Earlier this month, a group of state attorneys general and the DeFi Education Fund sued the SEC for unconstitutional overreach. In this particular case, the regulator is accused of exceeding its regulatory obligations by taking enforcement action against digital asset exchanges. ⁽¹⁾

The result? The current chairman of the SEC – Gary Gensler – will step down on January 20, 2025, and it is likely that the new person who takes over will be more crypto-friendly. One of the possible candidates is Paul Atkins, who is viewed favorably by crypto advocates. There is a possibility that the SEC will drop the entire case against Ripple, which will be another positive for XRP.

Overall, XRP has had a great few months and with the Trump administration in place, this breakout could well be just the start of a much larger rally. A key growth driver for XRP is likely to be Ripple’s upcoming launch of the RLUSD stablecoin. Currently awaiting approval, RLUSD will be a stablecoin fully backed by cash in the form of USD, treasury bonds and other cash equivalents.

Although XRP has seen a rapid 1000% increase since the start of 2021, the returns have not been consistent. Returns for in 2023 – which suggests XRP underperformed the S&P in 2022.

Actually, Continually beating the broader markets – in good times and bad – has been difficult for individual stocks and even cryptocurrencies in recent years. In contrast, the Trefis has High Quality Portfolio with a collection of 30 stocks outperformed the S&P 500 every year in the same period. Why is that? As a group, the stocks in the HQ Portfolio offered better returns with lower risk compared to the benchmark index. less of a rollercoaster ride, as the key performance indicators of the HQ portfolio show.

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