The cryptocurrency market is in turmoil this year. The total value of all tokens and coins in circulation recently reached an all-time high of $3.8 trillion, marking a significant increase from the bear market bottom of $823 billion in 2022.

XRP (XRP -19.75%) is the token created by fintech company Ripple in 2012 and has risen 325% since the beginning of the year. It now has a market capitalization of $146 billion, making it the third largest cryptocurrency in the world Bitcoin And Ethereum.

A series of tailwinds could push XRP to new heights in 2025. Could it rise to $5 from its current price of $2.55?

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Ripple has built an innovative payment network

It can take several days for banks to send money to other banks abroad using regular bank transfers, as they sometimes use different infrastructure (some use the SWIFT network, others not). This means that intermediary banks have to be involved as intermediaries for every transaction, which leads to delays.

Ripple developed the Ripple Payments Network (formerly RippleNet) to streamline this process. Its technology works with all existing banking infrastructure to standardize payment protocols.

For example, banks on the SWIFT network can “talk” to other banks that do not use SWIFT. This means that banks can process transactions directly with each other, meaning that transfers via Ripple Payments are generally instant.

The cryptocurrency XRP, controlled by Ripple, helps standardize these transactions. For example, an American bank could send XRP to an Italian bank instead of sending US dollars, as this would avoid exchange rate fees and other transaction costs. The banks on both sides of the transaction can perform their own conversions between XRP and their desired fiat currency.

So while speculation has a large impact on the price per XRP token, there is real demand from financial institutions that use XRP tokens to process transactions.

XRP could benefit from a looser regulatory environment in 2025

The US Securities and Exchange Commission (SEC) sued Ripple in 2020 with a lawsuit alleging that the XRP token is a financial security (such as a stock or bond). Companies that issue securities must register them and be subject to a strict regulatory framework, meaning Ripple’s operations would be significantly restricted if the SEC wins.

Ripple argued that XRP is a commodity rather than a security, which would make it less subject to regulatory scrutiny. But here’s the problem: There are currently around 57 billion XRP tokens in circulation, but there is a fixed supply of 100 billion tokens. Ripple controls the other 43 billion tokens and can release up to 1 billion per month to meet demand. It basically controls the offering, so I understand the SEC’s perspective.

For example, a cryptocurrency like Bitcoin does not have this problem because it is not controlled, supported or issued by any company or individual.

In August 2024, the judge ruled that XRP can only be a security under certain circumstances, such as when a new offering is issued to institutional investors, but not when it is traded on crypto exchanges or used in transactions. Ripple was ordered to pay a $125 million fine and the news was received positively by investors, although the SEC is appealing the decision.

But the changing political climate following the 2024 US presidential election could change everything. Current SEC Chairman Gary Gensler has announced his intention to step down from the commission on January 20th, and with the nomination of a pro-crypto businessman to take Gensler’s place, XRP investors are already hoping that the federal government’s policies will lead to this Topic could experience a massive upswing.

XRP could reach $5 in 2025

Banks do not need to use XRP to use the Ripple Payments network as it is also compatible with fiat currencies. This means that the value of XRP does not necessarily depend on the success of Ripple Payments.

As a result, the price of XRP often fluctuates based on the whims of speculators who buy it in the hope that it will rise higher. Despite its 325% increase in 2024, it has still not reclaimed its all-time high of $3.40 from 2018.

But one thing we learned in 2021 as meme tokens fell Dogecoin And Shiba Inu has skyrocketed, one should never underestimate the power of speculative madness. There isn’t really one basic Reason for XRP doubling from here and hitting $5, but it’s possible that investors are starting to price in Ripple’s potential under a more lenient regulatory regime – even if that doesn’t guarantee it will boost demand for XRP .

At $5 per token, XRP would have a market cap of around $290 billion, which is still a fraction of Bitcoin’s $2 trillion market cap. Bitcoin is the largest cryptocurrency in the world, but it doesn’t really have a solid use case. Many investors consider it a form of digital gold, but it is not widely used as a payment mechanism by consumers or businesses.

This means that Bitcoin is also a speculative asset. Most investors buy it in the hope of higher prices in the future, which is why they also buy XRP.

That’s why investors should keep one thing in mind: Even if XRP hits $5 in 2025, it won’t necessarily stay there. After peaking at $3.40 in 2018, it crashed 96% in 2020 to just $0.13, and there’s no reason why that can’t happen again with the current surge subsides.