Part of the confusion when it comes to investing in cryptocurrencies is which currency to invest in. There are hundreds of viable options that all operate differently, and all have different markets that react unlike any others. Most people will know about Bitcoin, and will want to invest there, but some will start to diversify and look for bigger opportunities, such as XRP.
XRP, the token created by the US company Ripple, is one of the biggest cryptocurrencies in the market, and it is one coin that operates in a very unique way in comparison to other coins — this brings with it some new and exciting opportunities.
Ripple Investing: What Is It?
Investing in Ripple is not too unlike other investing. It does take a different turn as it is a cryptocurrency investment opportunity, and the fact that the coin of choice here is Ripple makes it slightly different from say trading in Bitcoin.
Cryptocurrency investing and trading is different in a good way from traditional investing as this space has been built to be very inclusive and have little to no barriers to entry. Cryptocurrency investing requires a smart phone and usually a low minimum deposit before a trader can start — but on some platforms it can take as little as 5 minutes to get going.
So, when it comes to Ripple investment, it is important to know what makes this cryptocurrency so different from others. While the likes of Bitcoin and Ethereum and other top coins strive for decentralization, XRP is wholly owned by Ripple.
Ripple is also trying to make a cryptocurrency to fill a unique niche in the financial world as they feel that cryptocurrency can be best used serving banks. The likes of Bitocin and others have been driving to replace or outdo banks while Ripple wants its token to be a coin banks use to transfer value over borders quickly and easily.
This is a good gap in the market as there is ample opportunity for banks to take advantage and keep up with the times by using Ripple and their XRP solutions. But it means the market for XRP is more affected and impacted by news surrounding bank adoption and regulation of cryptocurrency.
With all this in mind, the question is how good of an investment is Ripple in 2021 and how long will it remain a top cryptocurrency asset that draws in investors. To answer that question, one needs to have a look at how the coin did in 2020 and years prior.
Is Ripple A Good Investment? How It Performed In 2020
It may sound counter intuitive, but Ripple’s trajectory through 2021 and beyond is probably looking quite good based on the fact that it had a really tough 2020 and the years before. The coin suffered through 2019 and was one of the worse performing top crypto assets. But this means there is a lot of room for it to go up.
To understand the path to how XRP will perform in 2021, and how 2020 shaped it, it is pertinent to go back a few more years and examine the waves of XRP through its history.
XRP was created by Ripple as far back as 2012 with a pre-mined supply of 100 billion tokens. This figure is a lot larger than the set supply of Bitcoin which is 21 million coins. Additionally, more XRP coins can be created whereas no more Bitcoin will ever be made.
XRP was trading close to $0.005 when it launched – and prices remained largely flat until 2017, when the entire crypto industry went through an unprecedented boom. Most people know about Bitcoin’s peak in December 2017, but in April and May 2017 XRP ballooned to $0.40 per token, with prices settling down around the $0.20 range for the next six months.
Following Bitcoin’s boom, altcoin season set in and XRP prices rose 84 per cent in a day from $0.27 to $0.51 mid way through December 2017. The next two weeks XRP went to cross the $1 mark and finished the year on an incredible high of $2.30, an increase of 38,000 per cent, compared with where it was at the start of 2017.
However, what goes up must come down and XRP fell below the $1 mark when February 2018 came around. XRP continued to struggle all throughout 2019 and even while other top crypto assets picked up the pace in 2020, XRP still lagged behind.
Learn more about Technical Analysis
Investing In Ripple In 2021? Is It A Good Idea?
Having an understanding of Ripple’s background in the last few years, it is vital to understand if the coin is still a viable investment in 2021 and if you should pursue it. But to make this assertion, a few key understandings must be sought.
It is important to understand if you are the right person to hold XRP and to trade it — to see if the coin suits your needs and wants. It is also very important to understand what drives the price of XRP and if its main role as a disrupter of the transaction industry is still relevant.
XRP suits a number of different style traders and investors. It is a good coin for general cryptocurrency enthusiasts as it is an altcoin — that is to say separate from Bitcoin — but it is still respected and grounded enough as a top five coin with an established market.
At the same time, XRP is also a good investment for thematic investors in the financial sector seeing as XRP is a coin aimed at mainstream financial institutions. This means that people looking to invest in the future of transactions and payment would have a good shot at looking at XRP.
More so some factors which influence the XRP token are different than those which impact other cryptocurrencies. Therefore, it could be used as a hedging tool when investing in other currencies.
And finally, and most relevant, is that XRP is a highly volatile asset and is very good for day traders as it can present many short-term trading opportunities, either for long or short positions.
If you feel that you fall into the category of investor or trader for XRP the next thing to consider in 2021 if this is the right coin for you is to see what shifts its market. As expected in the cryptocurrency space, general trends to the overall ecosystem play their part and XRP is known to move in tandem with other coins, notably Bitcoin.
More so, mainstream adoption is a big market mover as Ripple’s platform serves the need of many financial organizations and other companies within the industry, therefore, whenever it is adopted by another well-recognized brand, it could contribute to its value.
Technological development aids the XRP market as Ripple is still considered a startup, and as such, could introduce many innovations, and could even pivot. Since Ripple holds some 61% of all XRP tokens, major changes within the company could have a strong impact on the currency.
Investors in the United States, however, have to wait to see who the saga with the SEC and Ripple unfolds. In early 2020, after a major bullish breakout, the United States SEC claimed that Ripple sold unregistered securities to US investors. XRP is now already back to trading well above the prices before the story broke, making it likely for the altcoin to soar to new highs.
Ways To Invest In Ripple
As mentioned earlier, XRP, as a cryptocurrency, has very low barriers to entry to start investing and trading in. Someone new to the space can quite easily get their hands on XRP and begin their investing journey with the coin by just holding onto it and waiting for appreciation — or depreciation.
However, there are a number of different ways that a person can actually invest in Ripple and start to make money off of XRP.
It all begins with buying and holding. This is one of the more common and popular methods employed with investing in cryptocurrency and has especially paid off with regards to Bitcoin. Buying and holding isa simple and usually effective method to profit from a cryptocurrency, but it may not be the best use of XRP.
As explained above, XRP is a volatile asset and it has been fluctuating in price for some time now. Its movement has not been steadily upwards like other coins as its price is affected by a few different factors as it is owned by a full company in Ripple.
Another popular method to invest in cryptocurrency is usually through mining but it must be mentioned that you cannot mine XRP and this again goes back to the supply being owned and controlled by a single company.
The best way to invest and profit from Ripple is probably trading. In general, trading has become big in the cryptocurrency space as more and more sectors flood in to be part of the volatile and often profit-filled market.
Trading in cryptocurrency, including XRP, has taken off with traditional traders as they flood to well-established platforms that offer similar professional services that they are used to. There are also a number of trading products, like XRP futures contracts that allow for shorting and leveraging that make this one of the best ways to invest in XRP.
PrimeXBT is one platform that has attracted traditional investors into the cryptocurrency realm while still being approachable for new investors in XRP, and they explain a little better how XRP trading works and why it is a good investment. Read more here.
Pros And Cons Of Ripple
Just like any asset that is worth trading, and even more so, just like any cryptocurrency, there comes a list of pros and cons with XRP and trading Ripple. One needs to look at the pros and cons of the cryptocurrency space when it comes to trading, but going beyond that, it is important to understand what good and bad parts there are for Ripple trading.
Pros
- Low cost: While all cryptocurrencies can be bought at fractions of a whole — like Bitcoin can be bought with as little as $10, XRP is a token with a small denomination. As explained above, Ripple has only once been above $1 and so, if you were to purchase the coin, you can get a lot for a little bit of money.
- Solving a problem: Ripple has created XRP with the express goal of solving a real-world problem with blockchain and cryptocurrency. It solves problems for large financial institutions and also speeds up the flow of capital, which is excellent for the economy. But Ripple could work for small business owners, too. If it becomes widely adopted, the Ripple platform will provide millions of sole traders and entrepreneurs with access to the global economy.
- Having a real world use case and evidence of success — as Ripple does currently — means that there is a lot of potential and room for the coin to grow in its role which will also bring its market along with.
- Major player: When looking at alt coins to invest in the first stop is usually the market cap as this gives an indication as to how much of an impact the coin has in the space. Ripple has constantly been in the top three for market cap across the crypto sphere despite dropping recently a place or two.
- High market caps like this is a sign of investor confidence, and the fact that Ripple as a company is also doing well and valued high adds to the same sense of confidence.
- More than a coin: Having XRP as a coin that is run by a company in Ripple may be against the decentralized vision of most cryptos but it is another pro for investors as Ripple Labs Inc has over 500 full-time employers, including public relations and marketing specialists who promote the technology to banks, investors, new users, and the public.
Cons
- Ripple has control: While having Ripple in control of the cryptocurrency is good for investors from a confidence standpoint, it does bring in the age-old issue of centralized failings. The world has seen a banking collapse in 2008 which brought about Bitcoin, and if Ripple Labs makes some bad calls XRP can fail.
- Centralized: Ripple Chairman Chris Larsen owns around a third of all XRP. Ripple CEO Brad Garlinghouse also holds a significant amount, as do other senior board members. For many purists, this makes the coin feel centralized and against one of the core tenants of cryptocurrency.
- Because Ripple was specially designed for the banking and finance industry. Its primary purpose is to solve issues within the banking industry, rather than revolutionize the way ordinary people exchange or store value so this con may not be too relevant.
- Battle of legacy: Ripple is also trying to solve a problem that has a current and well-regarded solution. This solution is known as SWIFT, and while SWIFT works, it is not the most up-to-date way of sending money across borders.
- Ripple offers a more efficient way, but it has a long legacy to try and defeat if it wants to overcome SWIFT and take on the mantle of the new way of transacting.
- Ripple is currently involved in a legal battle with the US SEC. The SEC claims that Ripple sold unregistered securities to US investors when it issued XRP.
How Much To Invest In Ripple?
Like most cryptocurrencies, the barrier to entry is very low and it is intended to be an entry point for any one who wants to get into the space of trading. The fact that Bitcoin can be bought in fractions is once such an instance that proves this. More so, most crypto platforms also offer low minimum deposits to get started.
When it comes to Ripple and XRP, as discussed above, there is even more opportunity to get into trading this coin cheaply. The fact that each coin costs less than a dollar means that new investors can spend as little as $10 — on some platforms — and have in their possession a number of XRP tokens.
If a trader wants to just test the waters out of cryptocurrency trading, XRP is probably one of the better ways to go about it because of its low denomination and popularity across many different platforms. Being a top crypto by market cap means that it will have many places to be traded and these platforms will usually offer a quick and cheap entry.
