07:08 06.08.2020
ikrom Ergashev (Neironix)

Should You Invest In Ripple (XRP)?

The global COVID-19 pandemic ushered in a unique opportunity for timely investors to take advantage of weaknesses seen across multiple asset classes. Many stocks tumbled to multi-year lows only to soar to new historical highs within months. Commodities like silver gained more than 100% from its March lows while oil prices collapsed to negative $37 a barrel only to recover around $70 per barrel.

While all of these asset classes provided interesting coverage on the news, the cryptocurrency market is going mostly unnoticed. 

The Case For Ripple

Bitcoin is the most recognized digital currency as the majority of people have at least heard of it. Ranking second is ethereum, followed by arguably Ripple (XRP) or Tether.

Ripple was designed by Ripple Labs using their local digital currency XRP to quickly help individuals and businesses repay and trade cash. Individuals looking to hold the digital currency as an investment can do so through the StormGain ripple wallet.

Using ripple is typically cheaper and faster than rivals. Cross-border transactions can be completed within three minutes and this allows for a reduction in the transaction cost and time spent by up to 75%.

As the network continues to gain share by providing a superior service, the network is looking to handle 1,500 transactions per second in the near future.

Perhaps one of the most notable cases for investing in ripple is to look at who has already invested in the digital currency or trust it as a reliable platform to satisfy their financial needs. Encouragingly, more than one-third of the largest global banks are either using ripple or testing their technology. 

Also, 250 banks make use of ripple for cross-border payment technology, including industry trial MoneyGram.

Their participation in the ripple ecosystem gives it instant credibility and reliability among small-time investors.

Small Price, Big Potential

Ripple is an attractive investment for young investors that don’t mind holding the cryptocurrency in a wallet for years, if not decades. The reason why this is the case is mostly attributed to the low per-unit cost of the coin.

The price of ripple hit a record high of $3.84 in 2018 and has since fallen all the way to 11 cents in early March 2020. At a current price of around 20 cents a coin, the cryptocurrency needs to merely recapture half of its all-time highs to give investors an outsized return.

If the price of ripple hits $1.50, it represents a price increase of around seven times. While a mere $500 investment would be valued at $3,500, the return potential looks even more attractive on a $5,000 or more investment.

Can bitcoin offer a similar return of seven times? While it is possible for the digital currency to rise to $70,000, the fact is that it hasn’t shown any potential to come anywhere close to this level after peaking at around $20,000.

Also, young investors find the concept of buying $500 worth of bitcoin difficult to understand. At the current price, this amounts to a mere fraction of a bitcoin coin at 0.05, as opposed to owning 2500 ripple coins.

Perhaps a more reasonable move for investors is to diversify and buy both ripple and bitcoin. Perhaps an appropriate ratio would be 75% ripple and 25% bitcoin. After all, cryptocurrencies are known to soar higher on heavy volume in very short periods of time. 

In fact, the currency has gained thousands of dollars in value in a span of hours. It would be a shame for investors not to be able to capitalize on massive gains literally overnight.

Bottom Line: Be Patient

Ripple is easily a top-four cryptocurrency in terms of market capitalization even though it pales in comparison to its rivals. Ripple is valued at around $10.34 billion which implies it has plenty of runway ahead just to catch up to ethereum that is valued at $35 billion and bitcoin at $200 billion.

Neironix does not forecast or provide investment advice. If you need investment advice or forecasts for cryptocurrency, please contact the appropriate experts

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