Crypto Market Booms: Investors on a High

The year 2024 proves to be exceptionally successful for cryptocurrency investors. The total value of all cryptocurrencies has more than doubled from the end of the previous year, reaching 3.5 trillion US dollars. Leading cryptocurrencies like Bitcoin significantly contribute to this increase in value. Even more speculative tokens show strong gains. For example, XRP, despite previous regulatory uncertainties, has risen by an impressive 250%. Declining interest rates boost the demand for high-growth assets such as stocks and cryptocurrencies. Investors also hope that the future Trump administration will be more favorable to the sector than previous governments, potentially opening up new value creation opportunities. XRP could particularly benefit from such a regulatory shift. But will it prove to be a better investment than Bitcoin in 2025? The global banking system is complex, and international money transfers can take days. Some financial institutions use the SWIFT payment network, while others rely on intermediaries. Ripple has addressed this issue. Its network, Ripple Payments, connects existing banking infrastructures and enables instant transactions. The XRP token serves to standardize these operations. For example, a U.S. bank could send XRP to a Japanese bank to eliminate exchange rate and transaction fees. The conversion into the respective fiat currency is then managed by the banks themselves. Out of the existing 100 billion XRP tokens, 57 billion are in circulation, while Ripple holds 43 billion and releases up to one billion monthly to meet institutional demand. In 2020, the U.S. Securities and Exchange Commission sued Ripple, seeking to classify XRP as a financial instrument, which would impose strict issuance rules. In August 2024, the lawsuit was partially settled: Ripple received a penalty of 125 million US dollars. The court ruled that XRP only qualifies as a security in certain situations, such as institutional sales, but not in transactions on cryptocurrency exchanges. As the SEC appeals this ruling, investors hope for the end of Ripple's legal troubles once the new administration takes office on January 20, especially since President Trump has nominated the crypto-friendly entrepreneur Paul Atkins as head of the regulatory agency.