Bitcoin stands as the foremost cryptocurrency with a market cap of $1.8 trillion, positioning itself as a store of value. XRP, created by Ripple, serves a distinct purpose in global payments but faces regulatory challenges. Despite recent legal victories for Ripple, Bitcoin’s consistent growth and potential government involvement as a buyer make it arguably the better investment choice for 2025.
Bitcoin, the largest cryptocurrency globally, maintains a striking market cap of $1.8 trillion, accounting for over half of all cryptocurrencies in circulation. It’s become increasingly appealing to investors who see it as a viable store of value. With demand on the rise, the potential for significant long-term gains remains a possibility, especially with the crypto landscape evolving rapidly. Meanwhile, XRP, created by Ripple, was designed for standardising global payments, thus serving a practical role that could enhance its valuation in the future.
The XRP network aims to enable banks to settle transactions directly with one another, greatly speeding up cross-border transfers. Ripple’s design allows for transactions at a minuscule cost of 0.00001 XRP, making it significantly cheaper than traditional methods, which often incur hefty foreign exchange fees. There are 100 billion XRP tokens total, with about 58.4 billion currently circulating as Ripple retains control of the remaining tokens, releasing them based on demand. This regulatory backdrop has been tricky, as the SEC sued Ripple in 2020, claiming XRP should be classified as a security.
In a somewhat surprising turn of events, a court ruling in August 2024 determined that XRP could only be classified as a security under specific conditions, like when issued to banks, but not in general crypto trading or transfers. While Ripple faced a $125 million fine linked to this ruling, investors expressed optimism following the outcome. The SEC, now under new leadership, seems to be looking for a settlement to this ongoing saga, providing hope to Ripple and its investors.
Turning our focus to Bitcoin, which lacks the unique utility XRP provides, it has managed to skate by without regulatory issues. With a fixed supply of 21 million coins, Bitcoin is fully decentralised, making it less likely to be categorized as a security. Several Bitcoin ETFs have been approved by the SEC, creating new opportunities for institutional investment which previously stayed away due to the risks of directly holding Bitcoin. The influx of around $110 billion into these ETFs underscores the scarcity of options for institutional players wanting exposure to BTC, despite various holding risks they face.
The perspective that Bitcoin is the digital equivalent of gold has gained traction, with analysts like Cathie Wood from ARK Investment reflecting that institutions could allocate as much as 5% of their assets to Bitcoin ETFs. This could push Bitcoin’s price up to an eye-watering $3.8 million by 2030, although some sceptics argue such a price point may be excessively optimistic. For the more grounded viewpoint, if Bitcoin matched gold’s market cap, we’d see a price of around $1.052 million, which still represents significant growth potential.
Additionally, developments in U.S. government policy, particularly with the establishment of a Strategic Bitcoin Reserve, could act as a significant positive influence. The reserve already includes over 207,000 Bitcoins seized from illicit activities, and should Congress authorise future acquisitions, this could serve as a considerable tailwind for Bitcoin, further cementing its place in the market.
With both Bitcoin and XRP seeing pullbacks from their previous December highs amidst a general shake-up in risk appetite, experts view the current climate as a potential buying opportunity. Historical trends show Bitcoin having a knack for breaking record highs, supported by its growing group of believers, while XRP hasn’t reached a new peak since 2018, falling short even during the recent market rally. As usage of Ripple’s network doesn’t mandate banks to use XRP directly, its price may be more susceptible to speculative waves rather than genuine demand.
Taking all this into account, Bitcoin seems positioned to be the better investment choice heading into 2025 and beyond. Particularly, the implications of the U.S. government potentially becoming a buyer could be a massively bullish sign for Bitcoin, drawing interest from new and existing investors alike.
