Crypto stakeholders got exactly what they wanted with Donald Trump's election win. The price of Bitcoin is at all-time highs of more than $85,000. Trump positioned himself as an advocate for crypto, pledging regulatory reform. I expect the sector to continue to march higher. While I am sure Bitcoin and many other cryptocurrencies will benefit, as many tokens tend to move in parallel, my No. 1 cryptocurrency to buy after Trump's win is not Bitcoin.
Escaping regulatory uncertainty and gaining more exposure
Although Bitcoin has almost doubled this year, the price of XRP (CRYPTO: XRP) is down about 2%. Ripple Labs founders Brad Garlinghouse and Chris Larsen created XRP in 2012. Originally, Ripple and XRP's main use case was making cross-border payments more efficient with nearly real-time settlements that remove the intermediary required in bank transactions.
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XRP, though, has struggled since it became the target of a Securities and Exchange Commission (SEC) lawsuit. The SEC sued Ripple, Garlinghouse, and Larsen, claiming they sold XRP as an unregistered security in 2012. Crypto stakeholders and industry-watchers have monitored the case carefully because it had ramifications regarding how much authority the SEC would have to regulate cryptocurrencies as securities. Ripple and its founders won the case, but the SEC has appealed parts of the court decision.
Trump has promised to try and fire SEC Chairman Gary Gensler "on day one" if elected. Gensler led the charge on the Ripple lawsuit, and many view him as a roadblock to the advancement of crypto. As the face of this important and lengthy lawsuit, XRP should benefit if Gensler is removed, which looks more and more likely.
Gensler also instituted Staff Accounting Bulletin (SAB) 121, which requires banks to treat crypto assets they hold in custody for customers as on-balance sheet liabilities. This has effectively prevented many banks from offering crypto services because they would have higher capital and liquidity requirements, and would likely be subject to more scrutiny from regulators. The rescinding of the regulations in SAB-121 could increase the number of financial institutions willing to safeguard crypto assets.
It's also possible that a more crypto-friendly administration could pave the way for the debut of spot XRP exchange-traded funds (ETFs). At the start of 2024, Bitcoin spot ETFs were approved after a lengthy application and approval process. Such funds buy and hold Bitcoin, then issue shares based on how many Bitcoins they hold. Bitcoin ETFs are easier for investors to buy than Bitcoin itself, widening access to the asset. They have also increased demand for Bitcoin because they must purchase Bitcoin and hold it when investors add money to the ETFs. Ethereum ETFs followed the Bitcoin funds to approval, and some entities have already filed applications for spot XRP ETFs. Ripple Chief Executive Officer Garlinghouse has previously said a spot XRP ETF is "inevitable."
XRP is a buy
XRP is a buy for all the reasons listed above. The regulatory overhang it has faced for years could finally dissipate next year, a spot XRP ETF could be approved, and the token has underperformed so it may have more runway to rise once it gets going. XRP also has a solid use case and a fixed token supply, making it a potential hedge against inflation. Don't get me wrong, investors don't view XRP like Bitcoin, but I'd rather invest in a cryptocurrency with a fixed supply than one that never stops mining new tokens. Economists expect Trump's policies to be inflationary and add to the country's national debt, so assets with deflationary attributes may benefit over the long haul.
Before you buy stock in XRP, consider this: