Over the past 30 days, XRP has surged more than 375%, pushing the cryptocurrency into the top 3 by market capitalization. As a result, XRP has surpassed its peak from the last market cycle and is now approaching its all-time high of $3.40.
XRP is a cryptocurrency developed by Ripple Labs to enable fast, low-cost cross-border payments. Unlike many other cryptocurrencies, it operates on the XRP Ledger, a decentralized blockchain designed for rapid transaction processing. Ripple Labs emphasizes use cases such as providing liquidity to financial institutions and streamlining global money transfers. This vision has attracted investors since 2013, despite lagging fundamental activity.
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XRP price hits multi-year high
Since 2020, Ripple Labs has been embroiled in a bitter legal battle with the Securities and Exchange Commission (SEC). The SEC alleged in a lawsuit that Ripple sold unregistered securities to U.S. customers through the public sale of XRP. Over the years, the case has become a landmark legal battle, with Ripple reportedly spending up to $200 million in legal fees. Years later, Ripple won a partial victory when a court ruled that XRP was not inherently a security when sold to retail investors on public exchanges.
However, the SEC appealed the decision, and the case is expected to continue in the spring of 2025. Given the results of the recent U.S. presidential election, the case will take place under a more crypto-friendly SEC. With the expected resignation of SEC Chairman Gary Gensler in January 2025, investor optimism for a favorable outcome has increased. This hope has significantly boosted the price of XRP, with the cryptocurrency rising over 300% in the three weeks following the election victory. XRP is now approaching its all-time high of $3.40.
XRP price XRP/USD (weekly) / Source: Tradingview
Beware of the "Unit Bias" fallacy
The price spike has little basis in fundamental activity. According to analytics platform DappRadar, XRP Ledger has only 63,000 monthly users and $260 million in dApp volume over the past 30 days, lagging far behind its peers. By comparison, Ethereum has 1.8 million monthly users and $177 billion in dApp volume, while Solana has 111 million users and $9 billion in dApp volume. However, most XRP investors are not focused on fundamentals. Instead, many are driven by the current "cheap" price, which plays into a cognitive bias known as "unit bias".
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This bias causes investors to prefer owning entire units of an asset, undervaluing partial purchases. For example, buying "42 XRP" for $100 may seem more appealing than buying "just 0.001 bitcoin". The fallacy lies in focusing on the unit price rather than the total market value of the asset. For XRP to reach $100 per unit, its market capitalization would have to reach $10 trillion - a figure that is unrealistic given that the current total market cap of all cryptocurrencies is approximately $3.6 trillion.
