It’s a historic day for cryptocurrencies. For the first time, Bitcoin (BTC) has crossed the once-unthinkable $100,000 mark, extending a rally that seems to have ongoing momentum right now.
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However, BTC’s recent gains pale next to those of one of the biggest altcoins. Over the past month, Ripple (XRP) has turned from a laggard to a leader. Specifically, the coin has turned year-to-date losses into huge gains by surging more than 370% in just a few weeks.
The reason behind the broader crypto rally has to do with Trump’s reelection, given his and Republicans’ friendlier stance toward crypto. Additionally, SEC Chairman Gary Gensler announced his intention to step down on inauguration day. Gensler’s tenure at the SEC has been seen as a negative for the crypto space and had specific implications for Ripple after the SEC alleged that it sold XRP as part of an unregistered securities offering.
According to top investor Mike Fay, who’s ranked in the top 4% of TipRanks’ stock experts, these events are “two very positive catalysts for Ripple Labs and by extension XRP token holders.”
However, possibly a more significant catalyst revolves around the planned launch and potential regulatory approval in New York of the RLUSD stablecoin on the XRP Ledger, as that gives credence to the XRP Ledger being an alternative to the SWIFT system.
So, the coin has been surging on account of these developments, but the real question now is whether investors should jump in here. And Fay thinks the answer to that is a clear no.
“I believe these gains in the XRP token are more indicative of excitement from regulatory catalysts than anything else. The on-chain data doesn’t justify this enormous price move in the XRP token, in my view,” the investor explained. “On one hand, transferred value has been surging. But on the other hand, what is the right price for a token that doesn’t generate rewards from staking?”
Fay also cites the fact the XRP Ledger has struggled to sustain consistent growth in its average number of active users as other chains have and a lack of development as indicative of “mixed fundamentals.”
With a fully diluted market cap of $262 billion, the market suggests that XRP is more valuable than Wells Fargo and American Express. That, to Fay, is hard to justify.
“I’m not going to call XRP a sell at this point, but I’m certainly not chasing this rally,” the investor summed up. (To watch Fay’s track record, click here)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
