Over the past century, no asset class has rivaled the annualized return of stocks. But when the lens is narrowed to just the trailing decade, cryptocurrencies have absolutely crushed the benchmark S&P 500 in the annualized return column.

Though Bitcoin (BTC 0.46%) has led the way with its first-mover advantages, it’s XRP (XRP 0.56%) that’s been flying the highest of all the major digital assets of late. Over the trailing-12-month period, XRP has practically quintupled, up 396%, while Bitcoin has gained a more “modest” 84%, as of the late evening on Aug. 29.

Whereas stocks tend to ebb and flow because of tangible financial metrics, such as their operating results and prevailing economic data, emotions and hype are known to move digital currencies. There’s little question that anticipation and hype have helped lift XRP to a more than seven-year high. The question is: Will the old Wall Street adage “buy the rumor, sell the news” put an end to this monstrous rally in the world’s No. 3 digital asset?

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XRP entered 2025 in an ideal situation

Whereas Murphy’s Law states that “anything that can go wrong, will go wrong,” XRP has had virtually everything go its way since early November 2024.

In November, Donald Trump won the presidency, which was viewed as a positive for most cryptocurrencies. Aside from Trump’s tinkering with the idea of a Bitcoin strategic reserve during his campaign, he was viewed as the friendliest presidential candidate to the crypto industry.

Since Trump’s inauguration, he’s signed the Genius Act into law, which established stablecoin backing and redemption standards, audit requirements, and federal oversight for the largest stablecoin issuers. While this doesn’t directly affect XRP, it paints a picture of an administration that’s willing to remove tight restrictions that had previously been placed on digital assets.

Another hyped event for XRP has been the expected approval of a spot XRP exchange-traded fund (ETF). A crypto spot ETF gives a buyer exposure to a specific digital asset without having to directly purchase it on a crypto exchange. In turn, buyers would pay a nominal fee (the net expense ratio) that covers the management and marketing costs for the fund.

When spot Bitcoin ETFs were first approved, massive cash inflows were observed for weeks. If spot XRP ETFs were to get the nod from the Securities and Exchange Commission (SEC) come October, a similar multiweek period of cash inflows would be expected.

However, the most-hyped event of all was the expected end to five years of litigation and appeals between the SEC and Ripple regarding whether or not Ripple sold XRP as an unregistered security. Ripple is the largest holder of XRP coins and is the company utilizing XRP as its intermediary payment token on RippleNet.

Last month, the SEC and Ripple agreed to drop their respective appeals. The news investors had waited years for had finally arrived — and so has the selling pressure on XRP.

XRP’s faults may be difficult to mask without a carrot at the end of the stick

Since the SEC sued Ripple in 2020, ending this litigation had been viewed as the carrot at the end of the stick that kept the hype train rolling. But with the appeal process over, sweeping XRP’s tangible faults under the rug could be tougher than ever before.

On paper, the lure of XRP is that it can assist with the rapid settlement of cross-border payments. The XRP Ledger is capable of validating and settling transactions in roughly three to five seconds, with payments costing just a fraction of a penny. This is considerably more palatable than the decades-long standard for cross-border payments. The Society for Worldwide Interbank Financial Telecommunication (SWIFT) can take days to settle international payments and is much costlier per transaction.

But there are some big-time caveats and catches to this seemingly slam-dunk thesis.

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For starters, banks aren’t required to use XRP as an intermediary on Ripple’s payment networks. If global financial institutions use Ripple’s payment network but not XRP, demand for XRP tokens will likely be insufficient to support its nearly 400% price appreciation over the trailing year.

The adoption rate for RippleNet isn’t all that impressive, either. Whereas more than 11,000 financial institutions are using SWIFT as their preferred cross-border payment solution, only an estimated 300 global financial institutions are relying on RippleNet in some capacity. While some investors might view this as a glass-half-full opportunity for RippleNet to gain share over time, it also speaks to the ironclad grip the SWIFT network has on international payments.

This is a good time to note that XRP lacks standalone value. Unlike Bitcoin, which can be used as a form of payment and is often viewed as an inflationary hedge amid a steadily increasing U.S. money supply, there is no standalone use case for XRP, save as an intermediary for some transactions on Ripple’s payment platform.

Lastly, XRP isn’t even guaranteed to be the preferred cross-border payment coin. Though there’s no denying it’s connections to larger financial institutions, Solana offers notably faster and inexpensive transaction settlement. In addition, peer-to-peer payment platform Stellar can settle payments just as quickly as XRP.

With XRP’s big event now firmly in the rearview mirror, profit-taking may be the new norm.