The crypto world is never short on lofty predictions and wishful thinking, and XRP has had its fair share of bullish price targets. Perhaps the most interesting and promising narrative that has taken hold of late is looking at XRP’s market cap compared to the US M2 money supply. Could XRP really reach $30? Token ATH! takes a closer look at the numbers and market dynamics. Lastly, it takes a look at key expert projections to provide a rounded perspective on this bold goal.

The current US M2 money supply is a jaw dropping $21.86 trillion. For XRP to reach a market cap equal to 8% of the M2 supply, it needs a price of at least $1.748 trillion. That’s a bold goal at an impressive jump in value. Given XRP’s circulating supply, that would mean a price target of roughly $29.73. This would be a gargantuan jump from its present value, putting XRP’s market capitalization above even Ethereum’s current valuation. Is it feasible? Let's break down the factors at play.

Understanding the US M2 Money Supply and Its Growth

Before diving into the specifics of XRP, it's crucial to understand what the M2 money supply is and why it matters. The M2 money supply is a measure of the money supply that includes cash, checking deposits, and easily convertible near money. The M2 money supply has had a large degree of influence on the cryptocurrency market, as with general financial markets.

Definition of M2 Money Supply

The M2 money supply is a calculation of the money supply that includes:

  • Cash: Physical currency in circulation.
  • Checking Deposits: Funds held in checking accounts at commercial banks.
  • Savings Deposits: Funds held in savings accounts.
  • Money Market Securities: Includes money market mutual funds and other short-term, easily liquidated investments.

The M2 money supply is a broader measure than M1, which only includes the most liquid forms of money like cash and checking deposits. As a result, economists and investors alike keep a close eye on M2. The measure provides key information about inflation, economic growth, and Federal Reserve policy.

Recent Trends in M2 Money Supply Growth

Similarly, the US M2 money supply experienced dramatic swings in both 2020 and 2021. After a period of acute expansion in 2020-2022 due to COVID, disasters, and related costs, M2 money supply started contracting in 2023. Starting in December 2023, the M2 money supply has been increasing again with no sign of letting up. The most recent figures place it at $21.86 trillion. Together this represents a stunning 5.3% nominal increase since December 2023, or more than $1 trillion incremental growth.

This acceleration of growth may point to more liquidity in an already flush financial system. One indication of that is when a growing M2 money supply tends to encourage investment into more speculative assets, like crypto. This is due to the fact that there is more capital chasing down people and organizations to invest in expectations of higher returns. The current massive rise in M2 money supply would thus be perfect conditions for currencies such as Ripple’s XRP to flourish.

Potential XRP Price Implications at 8% of M2 Money Supply

Join us as we delve into what an 8% market cap for XRP means. This situation would be disastrous to its value and competitive future. This picture sets the stage for XRP to achieve massive growth, adoption and run rampant with use cases. Take this forecast with a large grain of salt. Read about what you can look forward to, as well as the work that still lies before us.

Current Market Cap of XRP

Thus far today, XRP’s market capitalization is only a small fraction of that $1.748 trillion goal. To put that into perspective, achieving this level would take a 14,700 times increase in the value of XRP. This would necessitate a confluence of factors, including:

  • Increased Adoption: Wider use of XRP in cross-border payments and other applications.
  • Regulatory Clarity: Favorable regulatory developments that provide legal certainty for XRP.
  • Market Sentiment: Positive investor sentiment driven by strong performance and broader crypto market trends.

The crypto market is extremely volatile, and occurs in the past may not happen in the future. Although the big opportunities are tantalizing, investors need to consider the dangers that are present.

Calculating XRP Price Based on Market Cap Projections

The circulating supply is the number of XRP tokens that are currently in circulation and available for trading.

With a circulating supply of just under 58.82 billion tokens, the market cap comes to $1.748 trillion. This would raise the value of each individual XRP token to about $29.73 per token. This calculation is based on the following formula:

This is of course a back of the envelope calculation. It fails to account for future changes to the circulating supply and other changes in market conditions. Nonetheless, it provides an important baseline benchmark for judging the possible price effect XRP. As XRP’s impact is magnified the closer it gets to supplying a larger percentage of the M2 money supply.

It’s only important to point out that some other analysts have provided comparable XRP price predictions for 2030. Analyst Steph anticipates XRP rising to as much as $30 by the year 2030. Bitwise’s most bullish case puts the price of XRP at $29.32 by that same year. With these projections, it’s certainly possible XRP may very well reach these levels in the coming long-term.

We do note that getting XRP to a $30 price tag would be historic achievement. It would catapult XRP into the ranks of the best performing cryptocurrencies in the market. This is not without challenges and potential pitfalls.

Making any forecast about the future of any cryptocurrency is an uncertain business at best. There are several internal and external catalysts that could affect XRP’s price movement. To offer an informative and fair viewpoint, let’s dive into both the bullish and bearish cases for XRP.

If demand increases as expected in this situation, the price of XRP may jump to $30. Strong fundamentals and positive market conditions would lead this remarkable increase.

Under this situation, XRP would have a hard time achieving the $30 price target, and XRP’s price may even fall by a substantial amount.

  • Market Volatility: The cryptocurrency market is highly volatile, and any sudden market downturn could negatively impact XRP's price.
  • Regulatory Uncertainty: The regulatory landscape for cryptocurrencies is still evolving, and unfavorable regulations could hinder XRP's growth.
  • Competition: XRP faces competition from other cryptocurrencies and traditional payment systems.

Bullish and Bearish Scenarios for XRP

Inflation and Federal Reserve policy play a central role in determining the macroeconomic environment. These variables can have a tremendous impact on the entire crypto market, as well as XRP specifically.

Inflation measures the rate at which prices for goods and services are rising. When inflation increases, the value – or purchasing power – of your dollar decreases. Traditionally, high inflation is toxic to traditional assets, especially hard assets, such as cash and bonds. Therefore, investors are on the lookout for alternative investments like cryptocurrencies.

  • Widespread Adoption: XRP becomes the preferred cryptocurrency for cross-border payments, leading to increased demand and higher prices.
  • Regulatory Clarity: Favorable regulatory developments provide legal certainty for XRP, attracting institutional investors.
  • Positive Market Sentiment: The overall cryptocurrency market experiences a bull run, lifting XRP along with it.
  • Technological Advancements: Ripple continues to develop and improve the XRP Ledger, enhancing its capabilities and attracting new users.

Should inflation stay high, it would likely push more investors to cryptocurrencies such as XRP to hedge against inflation. Increasing demand would be likely to drive XRP’s price up.

The Federal Reserve—the Fed for short —is the central bank of the United States. It’s charged with making monetary policy, which means influencing, or setting directly, interest rates and the money supply. We know from experience that the Fed’s policies can have an enormous impact—positive and negative—on our economy and financial markets.

  • Regulatory Crackdown: Governments around the world impose strict regulations on cryptocurrencies, hindering XRP's growth.
  • Market Downturn: The cryptocurrency market experiences a prolonged bear market, leading to lower prices for XRP.
  • Competition: Other cryptocurrencies or traditional payment systems gain market share, reducing demand for XRP.
  • Technological Setbacks: The XRP Ledger experiences technical issues or security breaches, damaging its reputation and driving away users.

When the Fed raises interest rates to combat inflation, it makes borrowing more expensive. In doing so, economic growth can decelerate. This would cause a reduction in demand for exquisite assets such as cryptocurrencies.

The Impact of Inflation and Federal Reserve Policy

When the Fed cuts interest rates, it injects the economy with a fresh dose of potential growth. Just like when the Fed pursues QE, more liquidity in the financial system means there’s potential for more manipulation to occur. This would result in trillions of dollars of new investment into cryptos.

This is because the Fed’s policies have a complicated, often indirect, and in some cases, counterintuitive effects on the cryptocurrency market. For these reasons, investors should pay careful attention to what the Fed is saying and doing to gauge what this could mean for XRP and other cryptocurrencies.

That said, it’s key to keep in mind that the entire crypto asset market is still in its early days. For better or worse, as the market continues to mature, it is expected to become further connected with the established financial system. This alarming reality may lead to tougher rules and greater scrutiny. If true, it could just as easily increase the adoption and integration of cryptocurrencies into the global economy.

The M2 money supply, inflation, and Federal Reserve policy are all related in a complex and dynamic feedback loop. This environment has a huge impact on XRP and other cryptocurrencies. Investors should read the tea leaves and adjust their investing strategies to match.

XRP would need a perfect storm of conditions just to reach $30. These factors range from the expansion of the US M2 money supply, movements in market cap, regulatory developments, technological innovations, and overall market sentiment. The target is ambitious, but it’s most certainly realizable. XRP’s best chance at success lies in focusing on its proven use-case of cross-border payments and adapting to the shifting regulatory landscape.

Ultimately, only time will tell if XRP can push farther up to $30. We know that the cryptocurrency market is extremely volatile. As always, conduct your own due diligence and use extreme care when considering any speculative investment opportunity.

For example, if the Fed raises interest rates to combat inflation, it could make borrowing more expensive and slow down economic growth. This could lead to a decrease in investment in riskier assets like cryptocurrencies.

On the other hand, if the Fed lowers interest rates or engages in quantitative easing (QE), it could stimulate economic growth and increase liquidity in the financial system. This could lead to increased investment in cryptocurrencies.

The Fed's policies can have a complex and sometimes unpredictable impact on the cryptocurrency market. Investors should closely monitor the Fed's actions and statements to understand the potential implications for XRP and other cryptocurrencies.

It is important to remember that the cryptocurrency market is still relatively new and evolving. As the market matures, it is likely to become more integrated with the traditional financial system. This could lead to greater regulation and oversight, but it could also lead to greater adoption and integration of cryptocurrencies into the global economy.

The interplay between the M2 money supply, inflation, and Federal Reserve policy creates a complex and dynamic environment for XRP and other cryptocurrencies. Investors need to stay informed and adapt their strategies accordingly.

XRP's potential to reach $30 hinges on a complex interplay of factors, including the growth of the US M2 money supply, market capitalization dynamics, regulatory developments, technological advancements, and overall market sentiment. While the target is ambitious, it is not entirely out of the realm of possibility, particularly if XRP can capitalize on its strengths in cross-border payments and navigate the evolving regulatory landscape.

Ultimately, whether XRP reaches $30 remains to be seen. The cryptocurrency market is inherently unpredictable, and investors should always conduct their own research and exercise caution before making any investment decisions.