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The XRP cryptocurrency, commonly known as Ripple (CRYPTO: XRP), has been incredibly volatile over the last year. Ripple’s price swung between $0.42 and $0.82 per coin in that period, and the chart line has headed toward the bottom of that range recently.

But I’m convinced that the cross-border payments system will recover in short order. By the time 2025 rolls around, Ripple tokens should be worth at least $1 each, revisiting a price level last seen in the fall of 2011.

Key drivers of Ripple’s recent price volatility

This is not a simple puzzle. Several factors are contributing to the movement of Ripple prices nowadays:

Overall market sentiment: The broader cryptocurrency market is experiencing fluctuations, and Ripple is not immune to these trends. Ripple isn’t a perfect proxy for the Bitcoin (CRYPTO: BTC) chart, but game-changing news affecting Bitcoin and other major cryptocurrencies can influence Ripple prices. And Bitcoin should start a significant uptrend before the end of the year, leading to new all-time highs in 2025 and beyond.
The regulatory landscape: The ongoing lawsuit between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) is an important factor. Any developments in the case, such as court rulings or settlements, can have a major effect on Ripple prices. Positive news usually leads to price increases, while negative news can cause declines. Judge Analisa Torres should deliver a verdict in the SEC lawsuit by the end of July, taking a crucial step toward regulatory clarity in the crypto market as a whole.
Adoption and partnerships: Ripple continues to form partnerships with financial institutions and payment providers worldwide. Increased adoption of the RippleNet technology for cross-border payments can boost confidence in Ripple and drive prices higher. Notably, some small nations are considering Ripple as the basis for their own digital currencies, boosting its potential for real-world application.

Ripple’s regulatory challenges — and opportunities

The SEC lawsuit is arguably the most powerful price driver on Ripple’s table. Regulatory actions rank a close second, with the Bitcoin effect and other issues trailing far behind. The case, which began in December 2020, centers on whether XRP should be classified as a security. The final outcome will reset Ripple’s price and market perception, and should also set a precedent for other cryptocurrencies to follow.

A favorable verdict could lead to a surge in XRP’s price by boosting investor confidence and facilitating institutional adoption. An unfavorable decision could trigger significant sell-offs and increased regulatory scrutiny. But Judge Torres has leaned in the direction of accepting Ripple’s arguments over the SEC’s so far, and I don’t expect a sharp reversal in the lawsuit’s final stages.

Global adoption and strategic partnerships

Beyond the America-centric SEC case, Ripple runs a global payments service. RippleNet and the Ripple token are exposed to a patchwork of local regulations around the planet, but the system is picking up speed despite this complex market structure.

For example, the island nation of Palau is developing a central bank digital currency (CBDC) based on Ripple’s blockchain ledger. The Himalayan kingdom of Bhutan is also looking at a Ripple-based CDBC. You can’t get much more enthusiastic about Ripple’s future than basing your country’s digital currency on its blockchain platform.

One step below that level of acceptance, Ripple has signed payment service partnerships with 80% of Japanese banks. In Switzerland, cryptocurrencies are officially seen as assets, getting the same legal treatment as gold, bonds, real estate, or stocks. Here, Ripple has an active partnership with at least one of the country’s largest banks.

A handful of crypto-friendly territories is a good start, though the crypto market is years away from sensible regulations with global coherence. I’m not saying that the only way is up, since legal and regulatory challenges can be unpredictable and often painful, but I don’t see much downside to Ripple on the front of international regulations.

Conclusion: A clear path to $1

Ripple is poised for a serious rebound, driven by strategic partnerships, increased adoption, and potential regulatory clarity. Payment volumes on the Ripple network have doubled over the last week, suggesting increased adoption and confidence in the platform’s utility for cross-border transactions. The expected assistance from a potential Bitcoin pop sure doesn’t hurt, either.

The SEC lawsuit remains a pivotal factor. A favorable ruling expected by the end of July could boost investor confidence and pave the way for institutional adoption.

The payment service network’s global partnerships, including countries considering Ripple-based digital currencies, validate its real-world utility. Bitcoin’s upcoming rewards halving and the ETF approvals in early 2024 could drive a bullish market sentiment in the long run, indirectly benefiting Ripple.

All things considered, Ripple’s path to $1 by 2025 is based on solid developments and strategic growth. Investors should keep a close eye on this undervalued cryptocurrency. Don’t be afraid to add a few Ripple tokens to your crypto portfolio at today’s bargain-bin price.

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Anders Bylund has positions in Bitcoin and Ripple. The Motley Fool has positions in and recommends Bitcoin and Ripple. The Motley Fool has a disclosure policy.

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