Why You Should Consider Buying and Holding XRP for the Long Term

The price of XRP has risen by an impressive 256% over the past three years. Surprisingly, there are still notable reasons emerging to consider investing in this cryptocurrency.

There are imminent catalysts on the horizon that suggest buying and holding XRP may be a wise move. Let's explore what these developments are and how they might positively impact XRP's long-term value.

Strengthening Ties with the Financial Sector

Following the trend set by major cryptocurrencies like Bitcoin and Ethereum, XRP may soon be added to various exchange-traded funds (ETFs). Several asset management companies, including Grayscale Trust and Purpose Investments, filed for ETF approvals in late January. This new development could allow traditional investors to gain exposure to XRP more easily.

Previously, the chances of an ETF approval for XRP were doubtful due to lawsuits from the SEC against Ripple, the company that issues XRP. However, with a more crypto-friendly regulatory environment under the current administration, the approval of ETFs that hold XRP seems likely in the next year. This potential approval could be a significant catalyst for increasing XRP's price.

ETFs aim to make XRP accessible for investors who manage their assets through traditional accounts, such as retirement or brokerage accounts. Without an ETF, these investors generally need to use specialized services to buy and hold cryptocurrency. While crypto enthusiasts have navigated these additional requirements, many traditional investors would likely consider purchasing XRP if it were as straightforward as buying stocks or other financial instruments.

If these ETFs receive approval, demand for XRP is expected to rise, along with trading volumes, which currently sit at about $8 billion within 24 hours (as of February 6). As investors buy into the ETFs, issuers will be required to purchase XRP directly to fulfill the underlying asset's performance. This factor should create upward pressure on the price of XRP and enhance transaction fees, potentially allowing for reinvestment in developing its technology.

Long-Term Benefits of ETF Development

The benefits of establishing ETFs for XRP go beyond a simple price spike upon approval. Increased integration between XRP and the traditional financial system will open up new opportunities for the RippleNet payment network. This could lead to reduced transaction fees, faster processing times, and increased marketing efforts aimed at attracting new users from traditional finance, governments, and the general public.

Moreover, the ongoing ETF applications might just be the beginning. Future funds could bundle XRP with other cryptocurrencies, like Bitcoin, or include financial derivatives such as futures, which might create varying impacts on XRP's price based on market dynamics.

Regardless of what the future may hold, the potential development of XRP ETFs signifies a positive turn for the asset, assuming SEC approval. Therefore, if you're contemplating investing in XRP, now might be an ideal time to make the purchase, especially if you're committed to holding it for the long term.

XRP, ETF, Investment