Through the first nine months of the year, XRP(CRYPTO: XRP) has been one of the top-performing cryptos, up more than 54%. Much of those gains can be attributed to a huge legal win that Ripple, the company behind the XRP crypto token, scored in July of this year in its long-running case against the SEC.
Based on this momentum, as well as rampant speculation about what could be next for XRP, some analysts are predicting a massive breakout in value. Some are even speculating that XRP could surge in value by over 750%. But just how likely is this breakout? If XRP is going to soar in value, three key things need to happen. Let's take a closer look.
SEC settlement
First and most importantly, Ripple needs to wind up its court case with the SEC. Until there is a final settlement of some sort with the SEC, regulatory risk will continue to hang over the company. That will make it very difficult for it to move forward with new strategic initiatives related to its Ripple payment platform.
That's why I'm so concerned that many analysts are portraying the favorable court ruling in July as an all-out win for XRP. It wasn't. At best, it was a partial win. Moreover, the SEC is now threatening to appeal the decision, which means we could be back at square one with this court case. From my perspective, it will be impossible to unlock the true value of XRP until there is a final court settlement with the SEC.
A major client win in the U.S. market
Throughout the long, protracted court case with the SEC that dates back to December 2020, XRP has been forced to focus on overseas markets. That has led to a number of impressive client wins in emerging markets, where the full power of the Ripple payment platform could end up having its greatest effect. That has led to a number of promising developments for Ripple, including projects related to cross-border payment systems and Central Bank Digital Currencies (CBDCs). All these have the potential to boost the value of XRP over the long haul.
Image source: Getty Images.
However, what has been missing is a major client win in the U.S. market. While there have been signs that U.S. market participants are growing more trusting of Ripple, what still has not been seen is a major U.S. bank embracing the XRP crypto token for cross-border payments or liquidity management. Yes, Western Union(NYSE: WU) did just announce a new partnership with XRP in August, but that sounds like much more of an experimental pilot project than an actual real-world implementation. In my opinion, a big U.S. client win would prove that XRP is really back.
Ripple IPO
Finally, there has been increased buzz and speculation about a potential IPO for Ripple. When Ripple hosted its "SEC victory party" in New York at the end of September, this only fed the hype machine about an upcoming IPO. Some analysts said that Ripple could be the next Coinbase Global(NASDAQ: COIN), in terms of a high-profile crypto company going public.
As you can imagine, this immediately led to speculation about what a Ripple IPO might mean for the price of the XRP token. Some suggested it might lead to a 20 times surge in the price of XRP, taking the crypto from $0.50 to $10 almost overnight.
While cash from a Ripple IPO would undoubtedly help the company build out its new XRP-related initiatives worldwide, there's a long way to go before that happens. As noted above, Ripple and the SEC are still at legal loggerheads. So is the SEC really going to approve an IPO filing from Ripple at this time?
New XRP price target?
Based on the above, I think the market might be getting ahead of itself in terms of predicting how XRP could skyrocket in value. Case in point: Over the past two months, XRP has almost entirely given up its gains from the SEC "victory" this summer. On July 11, XRP was trading at $0.48. On Sept. 30, XRP was trading at $0.52.
That being said, I think the three factors described above could become huge catalysts for long-term growth. I'm taking a wait-and-see approach for now, but as soon as more clarity emerges in the SEC court battle, it could be time to start accumulating XRP once again.
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Dominic Basulto has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Coinbase Global and XRP. The Motley Fool has a disclosure policy.
