Recently, XRP gained a new entry point into the institutional market due to the listing of Brazil's spot ETF and the launch of CME futures, with short-term prices likely benefiting from capital inflows. However, in the long term, XRP still faces structural challenges to challenge Bitcoin (BTC) and Ethereum (ETH). Here is an in-depth analysis:
1. Short-term opportunity for XRP: Institutional channels open, there is still space in the payments sector
(1) ETF and CME futures bring new liquidity
Brazil's Hashdex XRP ETF (XRPH11) is the world's first XRP spot ETF. Although its scale is temporarily small, it marks a compliant pathway for institutional funds to enter XRP.
CME launches XRP futures, enabling hedge funds and market makers to hedge risks more conveniently, reducing selling pressure in the spot market.
SEC litigation risk decreased: After Ripple's partial victory in 2023, XRP is no longer explicitly considered a security in the US, exchanges are relisting (such as Coinbase), and liquidity is restored.
(2) Cross-border payments remain a core advantage
Ripple's ODL (On-Demand Liquidity) has been adopted by some banks (such as Santander, Standard Chartered), with XRP serving as a bridging asset, allowing for cross-border settlements in 3 seconds at costs far lower than SWIFT.
If Ripple can sign more international banks (especially in emerging markets), the practical demand for XRP may steadily grow.
Short-term conclusion: XRP still has competitiveness in the payment field, ETFs and futures may bring short-term surges, but the long-term ceiling is apparent.
2. Long-term challenge: Why is XRP struggling to surpass BTC and ETH?
(1) Insufficient decentralization, reliance on Ripple Inc.
BTC and ETH are community-driven, with no single controlling entity, while over 50% of XRP is controlled by Ripple Inc., raising ongoing centralization concerns.
Ripple is often accused of manipulating the market (such as periodically unlocking escrowed XRP to flood the market), impacting investor trust.
(2) Sparse ecosystem, lacking smart contract and DeFi support
Ethereum (ETH) has the largest developer ecosystem, supporting innovations such as DeFi, NFTs, and Layer 2.
XRP Ledger (XRPL) focuses solely on payments, **lacking smart contracts**, which cannot attract developers, leading to an ecosystem stagnation.
In contrast, payment + smart contract chains like Solana (SOL) and Avalanche (AVAX) are capturing market share, and XRP's competitiveness is declining.
(3) Regulatory shadows not completely eliminated
Although Ripple achieved partial victory in the SEC lawsuit, US regulatory agencies may still reclassify XRP as a security, affecting exchange listings and institutional allocations.
In contrast, BTC has been viewed as a commodity (similar to gold), and ETH futures ETF has been approved, posing lower regulatory risks.
(4) Huge gap in market cap and consensus
BTC (market cap of $1.2 trillion) is 'digital gold', a preferred choice for institutional allocation.
ETH (market cap of $400 billion) is the 'global settlement layer', with an irreplaceable ecosystem.
XRP (market cap of $30 billion) is merely a payment tool, and market consensus is far less than the first two.
Long-term conclusion: XRP still holds value in the payment space, but its lack of smart contracts, insufficient decentralization, and weak ecosystem make it hard to truly challenge the dominance of BTC and ETH.
3. Possible future development paths
Optimistic scenario: XRP becomes the preferred settlement asset for banks
Ripple collaborates with global TOP10 banks, positioning XRP as SWIFT 2.0, with its market cap entering the top 3.
XRP Ledger upgrade supports smart contracts, attracting developers, and the ecosystem begins to flourish.
Neutral scenario: Maintain a niche market in payments
XRP maintains a market cap ranking of 4-6, fluctuating with the market, but its gains are less than those of BTC/ETH.
Partially adopted by some banks, but has not disrupted the traditional financial system.
Pessimistic scenario: Being replaced, gradually marginalized
SEC re-tightens regulations, XRP is delisted from US exchanges, liquidity dries up.
Competitors (such as Stellar XLM, CBDCs, USDC) are capturing the payment market, leading to a decrease in XRP demand.
Final conclusion: XRP is a 'payment expert', not a 'crypto king'.
Short-term (1-2 years): ETFs and futures may drive up prices, suitable for swing trading.
Long-term (5 years+): Unless XRP Ledger supports smart contracts and significantly decentralizes, it will struggle to shake BTC and ETH.
Investment advice:
Can be allocated in small amounts as a target in the payments sector.
However, if the goal is to be the 'next Bitcoin', the probability for XRP is very low; ETH or new public chains (such as Solana) are more likely.
In summary: XRP still holds value in the payment field, but its ecosystem, decentralization, and regulatory risks limit its ceiling, making the possibility of surpassing BTC/ETH very small.
