Key Points
XRP is facing two significant headwinds right now.
Neither of those headwinds is a dealbreaker for buying the coin today.
But they could make the next stretch of the road a lot harder for XRP holders.
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Often, investors focus on arbitrary price levels to determine their stance on an asset. For XRP, (CRYPTO: XRP) the $1 level likely has that importance for a lot of people, as to breach $1, it would need to lose around 30% from its current price of $1.39.
That kind of decline is not the likeliest outcome, nor is it a very likely one at all, but two forces could still make it happen within the next two years. Let's chart out the bear case for XRP and see why it's worth understanding even if it doesn't occur.
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A pretty bad macro environment is currently in the cards
The war with Iran is currently the dominant force acting on risk assets like crypto, and by extension XRP. It's also one of the pillars of the bear case for this asset which would send it below $1 and keep it there for a while.
The conflict has disrupted oil flows through the Strait of Hormuz for a slew of weeks now, re-igniting inflation expectations at the worst time for crypto. The Federal Reserve is now unlikely (at least in the very near term) to consider the interest rate cuts that tend to generate large volumes of the liquidity that crypto thrives on. At the same time, rising energy costs feed inflation, persistent inflation keeps rates elevated, and elevated rates make safe investments like U.S. Treasuries more attractive, thereby draining capital from riskier holdings.
And XRP might get weighed down by the same currents. If the war or the uncertainty it creates extends for a quarter or more, the resulting headwinds could push crypto into a deep drawdown. Of course, if this happens, it could be considered a prime opportunity to buy the dip, as the downturn wouldn't imply anything being wrong with XRP or its investment thesis.
The competition is fierce, and strengthening
The other pillar of the bear thesis for XRP is its competition.
XRP's original investment thesis, that it'd be a good medium to use as a bridge currency for cross-border transfers, is getting eroded by both the existence of stablecoins, which can easily fulfill the bridge currency niche, as well as by reinvigorated legacy money transfer players. For instance, SWIFT's upcoming Global Payments network involves over 50 banks across 25 corridors with near-instant settlement, and it's scheduled to go live by mid-2026. If SWIFT narrows the speed and cost gap enough -- problems that XRP sought to solve -- banks may never need to adopt XRP for settlement, and they'll just be able to use a newer version of the technology they're already accustomed to.
Rival cryptocurrencies like Ethereum are also positioned to siphon capital away from XRP. For its part, as of April 27, Ethereum hosts $16.6 billion in distributable tokenized real-world assets (RWAs), a segment that XRP is trying to become established in, and it offers a far deeper ecosystem for the emerging digital finance landscape compared to the XRP Ledger (XRPL). The XRPL holds $537.2 million in distributed RWA value by comparison.
Combine the strong possibility of a bearish macro environment with the reality of competitive erosion, and XRP's path to below a price of $1 for a year or two becomes uncomfortably plausible.
A scenario is not a verdict on the future
Despite the bearish scenario above, XRP is more likely to continue chugging along than it is to break down.
Spot XRP exchange-traded funds (ETFs) posted their strongest capital inflow streak of 2026 in April, pulling in $55.3 million in the first 17 days of the month alone, without posting a single day of net outflows. Thus there's still plenty of demand for exposure even with a turbulent macro backdrop and mounting competition.
For holders, the best approach is to be mindful of the two elements of the bear case and be ready to buy the dip if the geopolitical situation delivers an opportunity. At the same time, if there's evidence that XRP's competitors are measurably pulling financial institutions away from the XRPL, that's a more structural concern which would call the validity of the bull thesis into sharper question. Either way, be aware that this is not the right moment to bet the farm on this asset.
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Alex Carchidi has positions in Ethereum. The Motley Fool has positions in and recommends Ethereum and XRP. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
