Key Highlights
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Despite several positive trends in the cryptocurrency sector, prices have decreased since the summer months.
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XRP and Dogecoin have both experienced increases in their circulating supply over time, negatively affecting their prices.
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However, one cryptocurrency’s enhanced utility positions it as the more attractive investment choice.
- 10 stocks we prefer over XRP ›
If someone mentioned that the U.S. government would unveil plans for a Strategic Bitcoin Reserve and enact the Genius Act for stablecoin regulations, you might anticipate a phenomenal year for cryptocurrencies.
However, the reality has been quite different. While there were some encouraging moments, cryptocurrency prices have fallen since summer. XRP (CRYPTO: XRP) and Dogecoin (CRYPTO: DOGE) have dropped by 37% and 52% respectively over the last year. This decline can be attributed to a market reluctance towards speculative assets, as cryptocurrencies are infamously volatile.
The ongoing price declines raise an important question: which cryptocurrency currently offers a better risk/reward ratio?
What Affects XRP and Dogecoin Prices?
It’s essential to understand that cryptocurrencies lack tangible underlying value. Unlike gold or real estate, which are physical assets, the value of cryptocurrencies relies largely on supply and demand dynamics. Developers establish rules for how new tokens are minted, which is an area where both XRP and Dogecoin struggle. Dogecoin issues 5 billion new tokens annually with no supply limit, while XRP still sees its supply rise despite burning some tokens with each transaction.
XRP’s Potential vs. Dogecoin’s Challenges
XRP presents more growth potential due to its viability for real-world applications. While both cryptocurrencies have exchange-traded funds, the XRP ledger shows promising capabilities in financial transactions, competing with the SWIFT network used for most cross-border payments. The ledger is not only cheaper and quicker but may gain further traction now that Ripple Labs has resolved its legal battles with U.S. regulators.
On the other hand, Dogecoin and similar meme tokens depend heavily on maintaining popularity to support their value. Their low barriers to entry mean they face fierce competition, all while continuing to face supply increases that may hinder price stability.
Should You Invest in XRP Now?
Before deciding to purchase XRP, consider this: the Motley Fool Stock Advisor team has pinpointed what they believe are the 10 best stocks to invest in at the moment… and XRP isn’t among them. The selected stocks are expected to yield substantial returns in the future.
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Justin Pope has no positions in any stocks mentioned. The Motley Fool recommends Bitcoin and XRP. The Motley Fool has a disclosure policy.
