During the past year, cryptocurrency investors have taken a particular liking to opportunities beyond mainstream choices like Bitcoin and Ethereum.
Two cryptocurrencies that stand out to me are XRP (CRYPTO: XRP) and Dogecoin. Below, I’ll assess what’s been driving each of these cryptocurrencies and explore why one of them looks like the better buy.
If you aren’t familiar with XRP, you may recognize the company behind it, Ripple. XRP was developed as a means to facilitate financial transactions similar to what the Society for Worldwide Interbank Financial Telecommunication (SWIFT) does. The central appeal of XRP is that it can complete cross-border transactions more efficiently (i.e., faster and cheaper) than the legacy SWIFT system.
Although the appearance of disruptive, potentially superior technology might capture your interest, XRP’s utility isn’t much of a driving force behind the crypto’s price action.
Although XRP’s price has risen by roughly 300% during the past six months, let’s home in on a couple of specific surges. Around November, the XRP price rise was driven by the outcome of the U.S. presidential election. As a candidate, Donald Trump had been a vocal supporter of crypto, and after his election win it became clear that pro-crypto leadership was on its way to the Securities and Exchange Commission (SEC).
Ripple had been involved with a years-long lawsuit filed by the SEC — which alleged the company was improperly marketing XRP as a security, similar to a stock or bond. XRP has been defending itself for years, saying that XRP is a commodity, and therefore securities rules do not apply.
The second notable surge in XRP occurred during mid-January, after Trump’s inauguration. Finally, XRP experienced yet another jolt earlier this month. The driving factor for the most recent rise in XRP’s price came after the SEC dropped its suit against Ripple — as the XRP bulls had been anticipating.
In a similar fashion to XRP, the price of Dogecoin kicked into a new gear after the election. In my eyes, the rising popularity in Dogecoin around this time was not coincidental.
As a result of Trump’s victory, Tesla Chief Executive Officer Elon Musk was chosen to lead a new federal project called the Department of Government Efficiency (DOGE). My suspicion is that some investors found it humorous that the DOGE moniker shares the same ticker as Dogecoin, and as such, a narrative rooted in hype and speculation began. More specifically, I think investors bought into the idea that Dogecoin may be somehow officially endorsed, given its shared abbreviation with DOGE.
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