XRP Adopts MicroStrategys Bitcoin Model: A New Strategy for Crypto Exposure
In recent months, the cryptocurrency XRP has seen a surge in popularity, with investors from various industries deciding to add XRP to their balance sheets. This new trend is a version of the Bitcoin treasury company model, popularized by MicroStrategy, but with a twist. The XRP model is more accessible due to the lower cost of XRP compared to Bitcoin, allowing companies to invest in larger quantities with less capital.
The new XRP treasury strategy involves finding deep-pocketed outside investors, promising a high rate of return in exchange for investing in the business, and then buying as much XRP as possible. This strategy has already been successful for MicroStrategy, which has accumulated 582,000 Bitcoins over the past five years. However, the high cost of a single Bitcoin has made it prohibitively expensive for most companies. With XRP trading at about $2.30, the scale is much more accessible for companies looking to invest in this way.
At least five different companies have unveiled plans to add significant amounts of XRP to their balance sheets. For example, VivoPower International recently raised more than $100 million from investors to power its XRP strategy. This $100 million will go a long way when buying a $2 digital asset and not a $100,000 digital asset. While this isn't an endorsement to invest in these XRP treasury companies, it's important to note that if this strategy catches on more widely, it could lead to a higher price for XRP by the end of 2025.
However, this strategy also comes with risks. If the price of XRP declines, the companies could collapse in value. Additionally, there are currently no spot XRP exchange-traded funds (ETFs) available, which could lead investors to seek out XRP proxy stocks to get exposure. The Motley Fool's Stock Advisor team has identified 10 stocks they believe are the best for investors to buy now, but XRP was not included in the list.
The recent surge in XRP's price after the 2024 presidential election was enough to galvanize investors from around the world to find creative new ways to get exposure to XRP. What's happening now is unprecedented in the history of XRP. Companies in industries not even tangentially related to crypto or blockchain are suddenly deciding to add XRP to their balance sheets.
In conclusion, the new XRP treasury strategy is a promising approach for companies looking to invest in cryptocurrency. While it comes with risks, it also has the potential to drive up the price of XRP and provide a high rate of return for investors. As more companies adopt this strategy, we may see a significant increase in the demand for XRP by the end of 2025.
