XRP's Future Uncertainty Amid Structural Issues

XRP is currently trading at 61% below its all-time high from last year, after plunging amid the broader sell-off in the crypto industry.

Ripple Payments was designed to facilitate instant, low-cost money transfers between global banks, using XRP as a bridge currency. However, despite having a legitimate use case, XRP faces several structural issues that could limit its upside potential.

One issue is that using XRP isn't mandatory, as Ripple Payments also facilitates fiat currency transfers. This means the value of XRP won't necessarily increase in line with increased network activity.

Another issue is that banks typically don't hold onto bridge currencies, as they aren't useful outside of making transfers. As a result, XRP is extremely volatile and holding onto a large number of tokens can expose banks to significant losses.

Ripple has launched its own stablecoin called Ripple USD (CRYPTO: RLUSD), which offers practically zero volatility. This could put a major dent in the demand for XRP.