XRP Under $5: Time to Buy or a Trap Waiting to Spring?

XRP's price lingers below the $5 mark—a tantalizing entry point or a value trap? The crypto's recent performance has traders split between bargain hunting and bearish skepticism.

Bull Case: Cheap Entry or False Hope?

At sub-$5 levels, XRP looks like a discount compared to its 2021 all-time high. Proponents argue Ripple's legal clarity and cross-border payment dominance could fuel a rebound.

Bear Reality Check: Liquidity Mirage

Skeptics point to stagnant adoption rates and the token's notorious volatility. "Digital assets love round numbers—until they don't," quips one hedge fund manager, eyeing the $5 psychological barrier.

Final Verdict: High-Risk Gambit

This isn't investing—it's speculating with extra steps. XRP might moon if institutional money floods in... or become another casualty in crypto's casino economy. Choose your position size accordingly.

How cheap is XRP in reality?

One of the most common mistakes an investor can make is confusing value with share price. A price of a few dollars doesn't necessarily make an asset cheap, just as a high price doesn't necessarily imply overvaluation. To get a better sense of a company's valuation, investors should look past price per share (or token) and instead analyze market capitalization.

Right now, XRP boasts a market cap of about $190 billion. As the chart below illustrates, that's more than the combined total for crypto-centric companiesand. Taking this a step further, XRP's market cap is almost triple that of the combined market capitalizations of neobanks, and stablecoin issuer.

HOOD Market Cap data by YCharts

These are not trivial details. Even though XRP is trading for significantly less than $5, the market is already attributing greater value to it than to established, revenue-generating businesses with diversified ecosystems that serve customers on a global scale.

Image source: Getty Images.

Is XRP a buy right now?

Last year, the global market value for cross-border transactions was estimated by Grand View Research at $212 trillion. The firm forecast this to grow to $320 trillion by 2030 -- growth that WOULD imply both immense potential and an accelerated need for innovative payments infrastructure.

The distinction that I think many investors are misunderstanding is that an expanding cross-border transactions market is likely a more meaningful tailwind for solutions providers like Ripple than for bridge currencies such as XRP. In other words, broader adoption of the Ripple payment network is not necessarily a direct catalyst for XRP.

Although Ripple's growth could lead to new uses for XRP down the road, there is no guarantee the token will experience meaningful adoption. There are plausible scenarios in which Ripple's payment network sees success in niche use cases that do not require the application of XRP at scale. In such cases, XRP's upside probably will remain at current levels.

I see XRP as a speculative opportunity tied to an already abnormally volatile cryptocurrency industry. While its low per-token price may be tempting, XRP already sports a frothy valuation unsupported by traditional financial measures such as revenue growth or profitability -- and it reflects an optimistic narrative beyond proven competitive dynamics and scaled economics.

Ultimately, viewing XRP as inexpensive because of its $3 price tag is a misinterpretation of value investing. The token is already pricey, in my view, and believing it will maintaining this valuation requires high conviction in an unproven growth narrative hinging on enormous utility adoption.

Given the amount of unknowns surrounding XRP's future, I do not see the cryptocurrency as a rock-solid buying opportunity now.