When it comes to cryptocurrency, one name stands out above the crowd: Bitcoin (CRYPTO: BTC). The original cryptocurrency accounts for roughly 63% of the entire crypto market cap.

However, Bitcoin is so big that it doesn't always produce the best returns. More recently, XRP (CRYPTO: XRP) has gotten a lot of attention as regulatory pressure eases on the company, and its utility has gotten a major boost from several advancements from Ripple. Meanwhile, Ether (CRYPTO: ETH) is often seen as the backbone of DeFi, with its smart contract blockchain doing most of the heavy lifting in the industry.

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While there's a case to be made for either to outperform Bitcoin, I think Bitcoin will ultimately outperform amid the current environment. Here are three reasons why investors should consider the king of cryptos.

1. The flight to quality

President Donald Trump has quickly and aggressively enacted wide-reaching tariffs on just about everything imported into the United States since taking office in January. Not only has he announced massive potential tariffs on imports, he's also paused them, said he will carve out exceptions, and unpaused certain tariffs.

All of this leads to massive amounts of uncertainty in the market. It's hard to know what to do with your money if the playing field could completely change tomorrow.

When markets are uncertain, they sell off riskier assets. That's certainly true of the entire cryptocurrency market, and Bitcoin hasn't been immune.

However, of all the cryptocurrencies investors could buy, Bitcoin is the highest-quality investment. It has significant institutional backing and a lot of big stakeholders, and the U.S. government now holds Bitcoin as part of its strategic cryptocurrency reserve. Investors selling risky altcoins are likely to move their money to Bitcoin.

As such, it's no surprise that Bitcoin has held up better than either XRP or Ethereum in the last few months. I expect that will continue to be the case as long as the macroeconomic environment remains uncertain.

2. Investors pulling money out of the U.S. markets

Since Trump's tariff announcement, we've seen both U.S. stocks and U.S. debt decline in value. That's not typically how it works. Remember, investors usually move from risky assets (stocks) to safer assets (Treasuries). However, the decline in Treasuries suggests investors are completely abandoning U.S. markets instead of shifting from risky assets to safer assets.

Those investors will be looking for a safe asset to buy. Foreign debt could be an option; gold is another, but Bitcoin presents an interesting case as well. That's particularly true as a result of a second-order effect from the mass exodus from U.S. securities. The U.S. dollar has grown significantly weaker in the last few weeks.

The U.S. Dollar Index has fallen more than 10% since Trump took office in January. The dollar weakened considerably after the tariffs were announced on April 2, and it failed to bounce back after Trump announced a pause on those tariffs. When the U.S. dollar weakens, it typically results in higher pricing for Bitcoin.

3. Inflation could push the price higher

Bitcoin is seen as a hedge against inflation. Most economists agree the tariffs will be inflationary.

That only makes sense. An escalating trade war with taxes on every import, from manufacturing equipment to parts to final products, will have a huge impact on the final price of goods. Combine that with the weakening U.S. dollar, and we'll see massive inflationary pressure.

Since Bitcoin has a fixed supply, a dollar that can buy less will theoretically apply to Bitcoin as well. That means the price of Bitcoin will go up.

The economics of Bitcoin don't exist in a vacuum, though. The three factors outlined here, all fallout from Trump's tariffs, point to Bitcoin performing relatively well compared to other cryptocurrencies and other assets in general. The longer the macroeconomic environment remains uncertain, the longer the trade war goes on, the more money we'll see flow into Bitcoin compared to other cryptocurrencies. As such, investors may see Bitcoin's dominance of the market extend even further over the coming months.

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Adam Levy has positions in Bitcoin, Ethereum, and XRP. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and XRP. The Motley Fool has a disclosure policy.

XRP (CRYPTO: XRP) is quite ambitious for a cryptocurrency, aiming to be a cost-cutting tool for financial institutions making money transfers. Its next act might be even more ambitious than that.

It's already making strides to capture upside from one of the largest financial trends of the next 10 years or so. If it does what it is setting out to do, the result could be trillions more in value stored on its chain, with significant benefits for the coin's holders. But can it hit its target?

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This key trend could be the coin's biggest tailwind yet

According to a report published on April 7 by Ripple, the company that issues XRP, and Boston Consulting Group, there's an opportunity in the cryptocurrency sector that will be worth around $19 trillion by 2033.

The goal is to tokenize real world assets (RWAs) onto blockchains. We'll get to what that means in a moment. For now, just recognize that in 2025, there's only an estimated $600 billion of those assets that are tokenized, so a tremendous amount of growth could be on the way.

In short, an asset is tokenized if it's traceable and tradeable on a blockchain like XRP's. Tokenizing an asset is thus the process of linking the asset's ownership and metadata to a specific crypto token.

As for the "real-world assets" part, anything -- commodities, real estate, stocks, cars, and futures contracts, for example -- fits the bill and can be tokenized in theory. So, if someone's house was tokenized, they would be able to sell it or transfer it by making a transaction on the blockchain.

But why are Ripple and Boston Consulting Group so convinced that tokenizing real-world assets is going to result in such a vast amount of those assets living on blockchains instead of as they have been for all of history so far? In a word: convenience. Asset managers using blockchains to track and trade their assets can potentially do so with lower costs, faster speeds, less red tape, and fewer intermediaries compared to how they were doing it before.

So how does XRP fit into the picture? It's already a platform that asset managers and institutional investors are using to hold their tokenized RWAs. More than $1 trillion worth of assets have changed hands on the chain already. And, since it's already offering on-chain trading of crucial RWAs for banks and financial institutions, like U.S. Treasuries, it's a logical place for other asset managers to do business in the future.

Under a best-case scenario, most of the assets that get tokenized over the coming years will be held on XRP's ledger, bringing a vast amount of value to the chain. It will also create demand for XRP itself, as some of the coin is needed to process all transactions.

And because there's a network effect wherein having more volume of assets being traded results in better price settlement for asset traders, it could experience a flywheel effect -- with its early lead just getting larger and larger because competitors won't be able to offer similar efficiency to their users.

Success is possible, but far from guaranteed

Today, XRP is well positioned to attract assets to its chain via tokenization. Nonetheless, this trend is fairly new, and the competitive landscape is far from settled.

XRP is a leader in the RWA tokenization sector so far, but it isn't necessarily the top dog, because specialist players can offer new features to asset managers more rapidly. Likewise, XRP is only starting to get the social proof it needs in the form of buy-in from major financial institutions. Those same users could very easily develop solutions of their own and cut it out of the loop if they detect that the upside from doing so would outweigh the risks of making something new.

What's more, the connection between assets held on its chain and the value of the coin is not as strong as holders might wish, which somewhat limits the upside from hosting tokenized assets. It's undeniable that chains with more assets tend to have main coins that are higher in value.

But in the case of assets like real estate, nobody is about to confuse tracking an asset's value on a ledger with the ledger actually owning the asset and having full control over how its value is used or otherwise distributed.

So even if XRP becomes the home of trillions in RWAs on its chain, don't expect the coin's price to be hundreds of times higher than it is today.

On that note, there is nothing inherently blocking XRP from gaining in value from here as a result of increasing confidence in its asset tokenization platform. As long as it continues to offer the features that its target users need, this trend is a big bullish driver.

Should you invest $1,000 in XRP right now?

Before you buy stock in XRP, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and XRP wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $495,226!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $679,900!*

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Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends XRP. The Motley Fool has a disclosure policy.

In the cryptocurrency world, determining an asset's value is usually fairly difficult. But there is one specific type of cryptoasset that's comprehensively understood. An asset of that type shines a bullish light on the XRP (CRYPTO: XRP) cryptocurrency over the long term.

It isn't something that you'd be interested in buying for a gain, but you might be able to see yourself holding it anyway. Let's take a beat to learn about this helpful asset and why it's so important to the XRP coin's future prospects.

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This asset is in active use for its intended purpose

The Ripple group launched a stablecoin, Ripple USD (CRYPTO: RLUSD), last December. This coin is redeemable for $1 at any time, and it's backed by cash reserves to ensure that remains the case even during market or monetary disruption.

In total, the market cap of the stablecoin is $293.6 million, which is equivalent to the number of dollars stored on the chain in this particular financial instrument. That isn't a very large value in comparison to XRP's market cap of $107.3 billion, but it's important to note that Ripple, the company that issues XRP, can also choose to set aside some of its cash holdings to issue more of its stablecoin as well. So if there's an increasing amount of demand from potential users for stablecoins, the quantity of Ripple USD can be adjusted upward by issuing more.

As of noon on April 9, the 24-hour trading volume of that stablecoin was more than $81.3 million, which indicates a significant portion of the total value turned over during the prior day rather than merely being held and not actually used for any purpose. This means that holders of stablecoins on XRP's blockchain are actively using their holdings to execute transfers and make payments, just as intended. It also suggests that as new users are onboarded to the chain, especially financial institutions, Ripple will probably need to issue more of its stablecoin so that they have access to enough supply of an instrument in which to store their cash assets.

When Ripple does that, and offers its stablecoin to those institutions, the effect is that their fiat currency flows into XRP's chain, and is stored there. That tends to somewhat increase the price of XRP, as XRP is the asset that represents the totality of its chain, and it's also the asset that's necessary to have on hand to perform any action there. Therefore, whenever the stablecoin's market cap rises, it's a surefire sign to investors that Ripple is making accommodations for more users, and for more value to be stored on XRP's network.

And that's exactly what has been happening since the stablecoin's launch late in 2024, when its market cap was just $53.1 million. The new issuance shows that XRP's chain is enjoying wider adoption, which is why its future is likely bright.

Be aware that there are nuances here

Stablecoins aren't the only determinant of XRP's future. It's entirely possible for the coin's value to decline even as more money flows into Ripple USD. Remember, there's a pretty big gap between the coin's market cap and the market cap of its stablecoin, so there are a lot of external phenomena that could outweigh the impacts of big investors loading their cash assets onto the chain.

Furthermore, the policies surrounding stablecoins are still shaping up worldwide. It's likely that Ripple's relationship with regulators in the U.S. will enable it to stay on the right side of any new regulations that they implement over the coming quarters. But it probably doesn't have the same access in every other country that might host investors interested in holding assets on its chain. And that means there could be a disconnect between the promising-looking adoption curve of the chain today and what actually occurs as capital is either allocated to it or forbidden from allocating to it in the future.

But what should investors do with all of this information? Take it as a sign that XRP's feature set is appealing enough to its target demographic that certain core functionalities are getting scaled up to match demand.

If the trend continues, and it probably will, the XRP coin's price has a very good chance of rising over the long term.

Should you invest $1,000 in XRP right now?

Before you buy stock in XRP, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and XRP wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $496,779!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $659,306!*

Now, it’s worth noting Stock Advisor’s total average return is 787% — a market-crushing outperformance compared to 152% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 10, 2025

Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends XRP. The Motley Fool has a disclosure policy.

It might sound strange at first, but stablecoins are soaring these days.

I don't mean that the price of Tether (CRYPTO: USDT) or USD Coin (CRYPTO: USDC) is skyrocketing, of course. They are going nowhere from that perspective, essentially pinned to the $1.000 price point as expected. But the entire category of stablecoins is gaining momentum, with lots of new names on the market and a rising tide of trading volumes.

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So let's look at the surging stablecoin category. The calmest corner of the cryptocurrency market can be surprisingly exciting.

What makes stablecoins so... stable?

First, let's think about what stablecoins are good for.

These digital coins have several functions in the crypto world.

With a price permanently pegged to a traditional fiat currency such as the US dollar, the euro, or the Japanese yen, they are a helpful tool for crypto-trading exchanges and banks. Exchanging dollars for Tether or USD Coins is very straightforward, and then you have a crypto-based representation of simple dollars in your digital assets account. From there, you can use the stablecoins to buy other cryptocurrencies, without raising currency exchange questions by involving actual dollars again.

The leading names have become extremely stable over time. Tether prices fluctuated wildly in 2016, ranging from $0.10 to $2.01 when the very concept of stablecoins was new and unproven. The newer USD Coin had a lighter bout of volatility just after its launch in 2018, rising as high as $1.04. But Tether quickly stabilized and hasn't moved more than 1.1% away from a perfect $1.00 in the past five years. USD Coin took a quick 3.4% dip amid the collapse of the experimental Terra stablecoin in 2023.

Any respectable stablecoin looks like a straight horizontal line next to the S&P 500 (SNPINDEX: ^GSPC) stock market index, other cryptocurrency prices, or any other fluctuating economic data point. Here's a five-year stablecoin vs. S&P 500 chart for your amusement. The big blip of USD Coin uncertainty in 2023 is barely visible:

Tether Price data by YCharts

Beyond Tether: The expanding stable of stablecoins

Tether was the first name in the stablecoin game, and it's still the largest and most widely used option. It's essentially your only choice if you want to use a stablecoin that is independent from specific crypto exchanges.

USD Coin was launched by a group including Coinbase (NASDAQ: COIN). It's no surprise to learn that Coinbase defaults to using USD Coin across its trading platforms. That's not the only place you can buy, sell, and hold USD Coin, though. Every major crypto exchange supports it, and there are far more USD Coin transactions on Binance than on Coinbase.

The Sky.money crypto-trading platform is an interesting case. Coinbase launched the USD Coin, but Sky.money worked the other way around. This system started with the USDS (CRYPTO: USDS) stablecoin, formerly known as Dai and Maker. The rest of the trading platform was built around the quirks and requirements of USDS. Sky.money may not ring a bell, but USDS is the third-largest stablecoin by market cap.

And there are many more. For example:

• The Ripple Foundation launched a Ripple USD (CRYPTO: RLUSD) stablecoin in December, basing the coin on US dollars and the XRP (CRYPTO: XRP) cryptocurrency. This coin is helping Ripple's payment services execute international money transfers, serving as a super-liquid pool of cash-backed assets.
• The Tether Holdings group could soon introduce a second version of the Tether coin, specifically aimed at large institutional investors in the United States.
• And this could be the start of a large trend. Asset manager giant Fidelity Investments is planning a stablecoin. Even larger firm Blackrock (NYSE: BLK) introduced one in March 2024. Even Bank of America (NYSE: BAC) is open to the idea of an in-house stablecoin, depending on how American regulations will shape up around this opportunity.

So the stablecoin legion is growing larger and more diverse.

Stablecoin trading volumes speak volumes

Whether you're looking at Tether, USD Coin, or USDS, their average daily trading volume has been bubbling up over the last two years.

Tether's average transaction volume stood at $19 billion in early April 2023. Now it's up to $182 billion per 24 hours. USD Coin's volume rose from $6 billion to $28 billion over the same period. The Dai/USDS ecosystem surged from $130 million per day to $2.7 billion.

This is more than empty talk. People (and automated trading algorithms) are putting these stablecoins to work. In all fairness, the rising interest applies to non-stablecoin cryptocurrencies, too. Bitcoin's daily trading volume is up from $9.4 billion to $101 billion, for instance. But the stablecoin community is taking advantage of broader public crypto interests.

More than just trading tools

Stablecoins can do more than just facilitate trades between fiat currencies and cryptocurrencies. Their powers are growing over time, since every new stablecoin option wants to win customers and usage with their unique features.

Some of them offer generous interest rates, putting most savings and money market accounts to shame. The spare cash in my Coinbase account is earning an annual percentage yield (APY) of 4.1% right now. That's comparable to the best money market yields on the market today.

A few stablecoins rely on a specific blockchain system, like the XRP-based Ripple USD coin. Others pick a proven coin-launching foundation such as Ethereum (CRYPTO: ETH) or Solana (CRYPTO: SOL), depending on their technology to provide data security and smart contract functions. And then there's Tether, which provides transparent support for more than a dozen blockchain networks. That's a diverse approach, protecting Tether holders against platform-specific risks. Tether can always untether itself (har-de-har-har) from any risky or flawed solution, relying on a dozen alternatives instead.

So you see, there's plenty of buzz in the stablecoin sphere right now. There are plenty of alternatives for good reason. These mega-stable coins (often with lucrative yield rates) may look especially attractive when the broader crypto market is experiencing wild volatility, like this week.

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Bank of America is an advertising partner of Motley Fool Money. Anders Bylund has positions in Coinbase Global, Ethereum, Solana, and XRP. The Motley Fool has positions in and recommends Bank of America, Coinbase Global, Ethereum, Solana, and XRP. The Motley Fool has a disclosure policy.