2022 was a brutal year for cryptocurrencies. By the end of 2021, the cryptocurrency market as a whole is worth $2.2 trillion, according to CoinMarketCap. Twelve months later, the total value of all cryptocurrencies has fallen to $794 million. That's a 64% drop, which fits the description of another crypto winter.
But in early 2023 , crypto names are showing signs of life. The entire market is sniffing at another trillion dollar valuation.
Evidence of recovery is mounting. It's too early to call it the end of the cold crypto winter, but the ice may be starting to melt.
So what should crypto investors do when the market could soon begin a new chapter? Well, the two market leaders mentioned should always be on your shortlist for further consideration, but some of the smaller names should also show fantastic growth once the inflation-constrained cryptocurrency market continues.
In this regard, let me introduce you to the international payment system Ripple, which operates on the XRP token (CRYPTO:XRP) .
SEC vs. Ripple Labs
Ripple is best known for its ongoing legal battle with the Securities and Exchange Commission (SEC). Two years ago, a government agency filed a lawsuit against Ripple Labs, the company that runs the entire system, and two of its executives. The documents claim Ripple Labs raised $1.3 billion through an unregistered offering of investment securities.
The Ripple team disagrees, arguing that XRP is a digital currency used for direct payments, debit cards, bill payments and other transactions in the same way as euros or dollars. In addition, the defendants say the SEC has overreached in its efforts to expand its powers with respect to the trading and holding of cryptocurrencies.
Because of this requirement, buying XRP tokens in the US is currently problematic. Major cryptocurrency exchanges such as Coinbase and Robinhood shut down their XRP trading services shortly after the lawsuit was filed, and they closed their doors two years later.
Some smaller exchanges still support the Ripple network and XRP tokens even within US borders. You can also bypass legal status in the US market if you have a foreign bank account so that you can finance your XRP purchases in a legal market.
This may seem like a difficult loophole to find, but the truth is that XRP is thriving worldwide as SEC disputes work their way through the legal system here. XRP is the sixth largest cryptocurrency by market capitalization and seventh by trading volume.
In other words, many people are doing business with XRP in markets outside the US, making cross-border money transfers with low fees and fast settlement on every transaction.
Opportunities on the table
XRP is not a perfect investment, and Ripple is not a silver bullet that can cure everything that is wrong with international banking. For example, many crypto investors dislike Ripple's centralized structure under the control of Ripple Labs, a commercial enterprise in a world dominated by a decentralized non-profit community.
It's a good start though. The SEC lawsuit could derail its operations for the time it should be dedicated to maximizing customer network growth and consumer-grade usage, but legal chips could also side with Ripple in a dispute and free the network from transferring digital money to Continue . your business also in the US market.
In any case, the entire cryptocurrency industry is closely watching the outcome of this dispute, as it will likely contribute in one way or another to the development of long-term rules and regulations.
Either way, this will not be the end of cryptocurrency as we know it. In fact, even a draconian decision is better than the dismal uncertainty facing crypto investors today. Clarity of any kind would be a huge win.
So Ripple's legal position is very important for the entire cryptocurrency market. Experts and insiders expect a decision and/or agreement in the first half of 2023, so the lawsuit should be in its final stages.
The end of the SEC battle
If you have the chance to get your hands on XRP today, prepare yourself for extreme volatility as the SEC ruling takes effect. This is a short-term problem if XRP prices go down or up in the first few days. More importantly, the final bell of this war will certainly usher in a new era in the cryptocurrency sector.
And that will be the initial bell for long-term growth in one of XRP's biggest target markets. Remittances, which immigrants in the US use to send money to families back home, will reach a $626 billion global market by 2022.
About 14% of this money was sent from the US in the past decade, according to KNOMAD, the World Bank's Economic Development and Migration Database. It is the largest source of remittances, followed by the United Arab Emirates at 9.4% and Saudi Arabia at 8.1%.
Unlocking these blocked opportunities will make a big difference for Ripple and XRP in the long run. For example, Bank of America launched a partnership with Ripple in 2018 and is said to be interested in starting work on an XRP-based international payment solution once the legal drama is over. So it looks like a big thing in the making.
So it's not easy to buy XRP today, but if you have a way to do it, I believe it's worth it. Whatever happens in the courtroom, the value of XRP will soar in 2024 and beyond as cryptocurrency exchanges and remittance operators reopen the doors to doing business with XRP.
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Bank of America is an advertising partner for The Ascent, a Motley Fool company. Anders Bylund has positions in Bitcoin, Coinbase Global, Ethereum and XRP. Motley Fool has positions on and recommends Bank of America, Bitcoin, Coinbase Global and Ethereum. Motley Fool has a disclosure policy.