The rise, fall, and rise of Ripple and XRP

There’s nothing like a bull run to demonstrate the most commonly-understood nature of crypto: its volatility.

Bitcoin and Ethereum may have settled comfortably in their seats atop the market capitalisation chart, but a lesser-known token called XRP (Ripple) suddenly entered the Top Three in December 2024.

Few tokens have experienced the highs and lows quite like XRP. Riding on a 78% climb in just the past week alone, and over 400% in the last 30 days, the crypto rally has reignited excitement among investors, with XRP now priced just above $2.50 (as of 4 December 2024) and solidifying its position as the third-largest cryptocurrency by market capitalisation.

A history of peaks and valleys

Tumult has long been the middle name for XRP. Launched 12 years ago by Ripple Labs, the XRP token initially drew attention for its corporate feel and polished promises of banking the unbanked – striking up partnerships with multiple banks across the world in a bid to use XRP for cross-border remittances.

However, the excitement was short-lived as the token faced a series of setbacks, including the spectacular crash in 2017-2018 when the crypto bear came visiting. It also was the subject of a protracted legal battle with the US Securities and Exchange Commission (SEC). 

Unable to shake off the latter, XRP existed in a prolonged period of disappointment and scepticism among investors.

The dark side of XRP

The most noticeable cracks in XRP’s armour began appearing in the run-up to the 2021 bull run, when the SEC launched a lawsuit in December 2020, accusing Ripple of conducting an unregistered securities offering.

The long and public litigation cast a shadow over XRP, causing its price to plummet and leading to a loss of trust among investors.

Additionally, Ripple's close ties with financial institutions and its centralised control over XRP have raised concerns among crypto advocates about the token's lack of decentralisation and long-term viability.

Ripple's structure and setups

Unlike many rival blockchain networks, Ripple operates as a for-profit company with a unique structure that includes Ripple Labs, the company behind XRP, and the XRP Ledger, the blockchain.

Ripple Labs holds a significant portion of XRP tokens, which it uses to fund its operations and partnerships with financial institutions. This setup has been a point of contention for many in the crypto community, who argue that it undermines the decentralised nature of cryptocurrencies.

Ripple's architecture itself is built around the XRP Ledger, a distributed ledger technology that facilitates fast and low-cost transactions. However, the XRP Ledger relies on a smaller number of validators compared to other blockchains, many of which were handpicked by Ripple.

This naturally led to concerns about centralisation, which makes the network more susceptible to influence from major players and potential single points of failure.

Ripple Labs also drew ire from observers when it was discovered that they controlled their majority token share via escrow accounts, giving them significant control over supply and price.

Ripple's people and scandals

It wasn’t just the structure of Ripple’s network that was a problem. Ripple's leadership has also been a focal point of controversy.

Brad Garlinghouse, the CEO of Ripple, has been a prominent figure in the company's legal battles and public relations efforts. The company's executive team, including Monica Long, Jon Bilich, and Eric van Miltenburg, has faced scrutiny over their handling of the SEC lawsuit and the company's overall strategy.

Ripple executives have faced scrutiny and bad press over the years, in a notable incident, Ripple co-founder Chris Larsen publicly criticised SEC Chair Gary Gensler, calling him "the worst public servant of all time" during a CNBC interview. This strong statement came amid the prolonged legal dispute. The lawsuit named both Larsen and CEO Brad Garlinghouse as defendants, alleging that they personally profited from the sale of XRP tokens.

Another instance of negative press involved allegations that Ripple executives manipulated the market to benefit themselves. The SEC's complaint painted an unflattering picture of Garlinghouse and Larsen, accusing them of selling large amounts of XRP to enrich themselves while misleading investors about the token's true nature. This portrayal has led to widespread criticism and scepticism within the crypto community, with many questioning the integrity and motives of Ripple's leadership. Despite these challenges, Ripple has continued to fight the SEC's claims, hiring prominent attorneys and doubling down on their defence.

A new ripple of hope?

Despite its troubled past, XRP has shown signs of improvement in recent years. The launch of Ripple's RLUSD stablecoin and growing optimism over regulatory clarity have contributed to a renewed sense of hope among investors. 

Additionally, the potential approval of an XRP spot ETF by WisdomTree could unlock significant institutional capital and further elevate XRP's market position.

So, XRP, a good buy now?

Well, XRP's recent rise to the top can be attributed to several key factors:

Positive market trends: The overall cryptocurrency market has been performing well, with Bitcoin and Ethereum reaching new highs. This positive trend has always had a spillover effect on other cryptocurrencies, including XRP. This bull run is no different.

Trump speculationDevelopments: Rumours of SEC Chair Gary Gensler's potential resignation and a more crypto-friendly regulatory environment under the Trump administration have boosted investor confidence.

Whale activity: There has been significant accumulation of XRP by large holders, known as "whales." Over the past few weeks, wallets holding between 1 million and 10 million tokens have accumulated a total of $1.66 billion worth of XRP. This increased buying pressure has contributed to the price surge. It does also strengthen the manipulation accusations, however.

Retail Investor Interest: The number of XRP wallets has reached an all-time high, indicating increased interest from retail investors. This growing adoption and activity on the XRP Ledger have further fueled the price rise.

These factors combined have created a bullish environment for XRP, leading to its impressive price surge. However, it's important to remain cautious, as the cryptocurrency market is inherently volatile and subject to rapid changes.

XRP's resurgence is a testament to the ever-changing nature of the crypto world, it's important to remember that investing in cryptocurrencies carries inherent risks. Stay informed, stay cautious, and always prioritise responsible investing.

For those seeking a truly decentralised and reliable digital asset, Bitcoin remains the gold standard. With its robust network and widespread adoption, Bitcoin is the most trusted cryptocurrency in the market.