Investors in XRP (CRYPTO: XRP) currently have reason to celebrate. This cryptocurrency has surpassed the $2 mark, with a market capitalization of over $127 billion – becoming the fourth-largest cryptocurrency in the world. Acceptance from financial institutions is also growing strongly, bringing confidence in a bright future for XRP.

However, behind this positive picture are three headwinds blowing straight into XRP – and it is these factors that have slowed price increases since March. While they are not 'fatal', ignoring them is akin to believing that a strong wind will not slow down a kayak. Let's analyze each challenge and assess the impact on long-term investors.

1. Competition is Becoming Fiercer

The first challenge that XRP faces is fierce competition from other blockchains and traditional fintech companies.

Ethereum is currently the platform that accounts for about $126 billion of the total $240 billion stablecoin market – positioning it as the default solution for dollar transactions in the crypto world. Meanwhile, the XRP Ledger (XRPL), once seen as a pioneer in cross-border payments, is gradually losing its advantage.

Notably, traditional payment companies like Visa and Stripe are deploying similar technologies using stablecoins. Visa has recently invested in a startup processing over $12 billion in stablecoin transactions annually, while Stripe is expanding partnerships with banks to provide similar solutions.

What is concerning is that these companies already own payment systems worth trillions of dollars annually. As they integrate stablecoins into their current systems, businesses can easily access them without having to learn how to use a foreign crypto like XRP.

Although XRPL still stands out with its fast speed and extremely low transaction fees, network effects are favoring platforms where many partners already have accounts. If Ripple – the issuer of XRP – cannot convince stablecoin issuers to choose XRPL as their platform or secure a national-level agreement with a central bank, then XRP risks being left behind in the global payment market share race.

2. Unlocking Supply Creates Selling Pressure

One of the factors driving Bitcoin's price is its limited supply – there is no 'reserve' waiting to be unleashed on the market. In contrast, XRP has a regular monthly supply release schedule.

Ripple is currently unlocking 1 billion XRP each month from its escrow fund. Although 80% of that is usually locked back up immediately, about 100 – 200 million XRP is actually added to the circulating supply each period. At a price of around $2.15, this equates to selling pressure of up to $215 million each month.

If calculated annually, this supply could reach 1.2 billion XRP – equivalent to 2% of the current circulating supply of XRP (approximately 58.9 billion). Although this is not a high inflation level, in a market where buyers are more concerned about the 'float' (the actual coins circulating in the market) than the total supply, this is a factor that cannot be overlooked.

Furthermore, even if this supply is not immediately sold, its presence is enough to discourage a segment of investors – those fearing being 'undercut' by the new supply.

3. Retail Investor Sentiment Still Not Recovered

The final challenge comes from the market's trust in cryptocurrency, particularly from retail investors.

According to a 2024 Pew Research survey, 63% of adults in the U.S. reported that they do not trust the safety and reliability of current crypto platforms. While XRP has some compliance tools suitable for institutions and banks, the fear in public sentiment remains a significant barrier.

Another survey in 2022 from Pew showed that 46% of those who had invested in crypto felt that the performance did not meet expectations – indicating a 'crypto fatigue' sentiment is prevailing.

This shrinks the buying power from the retail investor group – directly affecting the flexibility and upward momentum of XRP. This negative sentiment is a form of 'gravity' suppressing the upward trend, though not strong enough to cause XRP to collapse completely.

However, if macro conditions stabilize and real-world applications continue to grow, over time, market sentiment will gradually improve. At that point, retail money may return even more strongly.

Conclusion: Optimistic but Not Reckless

XRP is in a strong position, with an impressive market capitalization and a clear vision in the cross-border payments space. However, three challenges – strong competition, pressure from unlocked supply, and negative sentiment from retail investors – are real obstacles.

They are not destructive, but enough to slow down the price increase if not addressed. For long-term investors, it is important to closely monitor these factors and prepare psychologically for correction phases while maintaining faith in XRP's long-term potential.