You may be surprised to learn how investing in cryptocurrencies compares to investing in the S&P 500.
of XRP (XRP -1.92%) The cryptocurrency, also known as Ripple, has experienced some wild ups and downs over the past five years. The Securities and Exchange Commission (SEC) filed a lawsuit against the Ripple Labs organization in December 2020, dealing a blow to its growth plans.
Soon, all US crypto exchanges froze customers' Ripple balances and stopped trading the token. Since then, Ripple's price chart has soared and tumbled in response to developments in the SEC lawsuit.
If you bought $1,000 of Ripple tokens five years ago, you might be losing sleep over that investment. At one point, your account was worth less than $470. About a year later, the price rose to $6,200 at one point.
However, over time, the unevenness has smoothed out. If she had continued her $1,000 of her XRP purchases until the end of April 2024, her return would have been much closer to her XRP price increase. S&P500 (^GSPC 1.02%) Index for that period.
^SPX data by YCharts.
This span covers the entire next cycle. Bitcoin's (BTC -2.27%) The halving of rewards tends to set the overall tone of the crypto market. However, the SEC's legal action has locked in XRP's value, meaning the token has not been able to keep up with the soaring prices of Bitcoin and other cryptocurrencies in recent months. His $1,000 Bitcoin investment made in April 2019 is now worth more than $12,000.
What’s next for XRP investors?
It is difficult to say whether XRP's gains will catch up with those of other digital assets, but the outcome of the SEC's challenge will likely be finalized soon. Court decisions over the past year have been in favor of Ripple Labs, and a full jury trial began last week. The process is expected to take place over the summer, and the results will help lawmakers and regulators finalize the legal framework around the purchase, ownership, and use of cryptocurrencies.
Meanwhile, the RippleNet international payments network continues to grow, and XRP-based stablecoins are also emerging. Ripple may win big or lose big, but it's never boring to watch its evolution.
Anders Byland has positions in Bitcoin and XRP. The Motley Fool has positions in and recommends Bitcoin and XRP. The Motley Fool has a disclosure policy.
