3 Reasons Why XRP Enthusiasts Should Still Be Cautious

XRP is a cryptocurrency launched by Ripple Labs in 2012. Its main purpose is to enable international money transfers at low cost, especially for banks and financial institutions. XRP is used as an intermediary currency, essentially meaning that two parties can exchange different currencies by investing in XRP. XRP has increased by over 420% in the past year, thanks to the conclusion of the prolonged lawsuit and optimism regarding a change in political attitudes towards cryptocurrencies. XRP enthusiasts believe this is just the beginning. Free from the constraints of legal battles, they believe that this token could reach new heights. Indeed, analysts at Standard Chartered predict that the price of XRP could surge an additional 300% or more before 2028. Anything can happen in the world of cryptocurrency. For example, if the SEC approves a spot XRP ETF and many companies start using Ripple's payment solutions, both could be significant growth drivers. However, speculation is rampant, and a lot of potential positive news has already been reflected in the price. Furthermore, there are a few reasons why XRP may not be able to maintain its current price.

1. XRP Seems to be Overvalued One of the challenges in investing in cryptocurrency is that we cannot use traditional metrics like the P/E ratio to value a project. There are specific metrics for blockchain, such as network activity, market capitalization, fees, or revenue. However, Ripple Labs is a private company not required to disclose financial reports, and XRP transaction fees operate differently from other blockchains. The lack of information itself is a reason to be cautious. We know that XRP has a market capitalization of nearly 170 billion dollars as of August 29. If it were a public company, it would be one of the top 100 companies in the United States. Its market capitalization is larger than Nike, Capital One, and S&P Global. That sounds unrealistic. Certainly, the global cross-border payment market is vast. The IMF estimates that the traditional international payment and cryptocurrency market will reach nearly $1 trillion by 2024. Ripple may also be in a favorable position to capitalize on - and even drive - changes in the industry. But currently, only a small portion of international payments are made through the Ripple network. It's hard to see how a cryptocurrency created by a team of over 900 employees can be compared to a global symbol like Nike with nearly 80,000 employees.
2. XRP Is Not The Only Payment Solution With an average international remittance fee of over 6%, according to the World Bank, the global remittance market is at risk of disruption. Especially as U.S. lawmakers recently passed the GENIUS Act, creating a clear framework for the issuance and reserve of stablecoins. Now, with legal barriers removed, many businesses are trying to find ways to integrate blockchain technology and stablecoins into their operations. Stripe is developing its own blockchain. PayPal has its own stablecoin and "Pay with Cryptocurrency" feature. Visa has announced a new cryptocurrency asset platform. Mastercard has cryptocurrency credit cards and blockchain infrastructure. Ripple Labs could benefit from the boom of stablecoins and tokenization as they provide custody solutions and blockchain integration, which can be built on the XRP Ledger. However, everything is still ahead. Ripple Labs is just one of the few companies competing for a position in a field undergoing significant changes.
3. The SWIFT Network is Testing Its Own Blockchain Solutions XRP is somewhat outside the payment game, as its main focus is to facilitate transactions between banks and financial institutions. Its main competitor is the current SWIFT network, an international cooperative network that includes over 11,500 organizations. Indeed, at the XRP APEX 2025 conference in June, Ripple CEO Brad Garlinghouse stated that XRP could capture 14% of SWIFT's international payment transfer volume in the next five years. But SWIFT is taking its own steps into the blockchain world. And they are not using XRP to do that. Last year, the current Swift payment system completed a pilot program for tokenized assets with UBS and Chainlink. XRP Seems to Be Overhyped XRP is an interesting cryptocurrency that uses blockchain technology to solve real-world problems. This alone makes it stand out from many other cryptocurrency projects and could help it secure a position in your investment portfolio. However, its market capitalization seems extremely high compared to a cryptocurrency that is just starting to establish its presence in a fiercely competitive market. It is important to note that holding XRP is not the same as owning shares of Ripple Labs. Ripple is a private company that owns about 40% of XRP. This not only gives Ripple significant control over the price of XRP but also means that XRP holders are more susceptible to changes in business priorities. If other investment channels outside of XRP, such as Ripple's own stablecoin, prove to be more profitable, that will be the direction the company will pursue.