Key Points
Despite multiple positive developments for the cryptocurrency industry, prices have tumbled since the summer.
XRP and Dogecoin have both seen their circulating supply increase over time, which weighs on token prices.
That said, one cryptocurrency's superior utility makes it the better buy.
If someone told you that the U.S. government would announce plans for a Strategic Bitcoin Reserve and pass the Genius Act for a regulatory framework on stablecoins, you'd probably assume that cryptocurrencies would have a fantastic year.
But that's not how it played out. While there were some good moments, cryptocurrency prices tumbled since the summer. XRP (CRYPTO: XRP) and Dogecoin (CRYPTO: DOGE) have declined by 37% and 52% respectively, over the past 12 months. The market has seemingly shied away from speculative assets, which helps explain the slide. Remember, cryptocurrencies are notoriously volatile, both up and down.
That doesn't offer much of a silver lining amid these ongoing downturns. Perhaps the more important question is, which crypto has the better risk/reward right now?
Image source: Getty Images.
What Exactly Influences XRP and Dogecoin Prices?
The first thing to remember about cryptocurrencies is that they don't have any tangible underlying value. For instance, gold is a precious metal you can hold in your hand. Real estate is another physical asset. Stocks represent businesses that earn revenue and profits. Cryptocurrencies aren't worthless, but their prices primarily depend on token supply and investor demand.
Developers set rules that determine how new tokens enter circulation. It turns out that both cryptocurrencies have issues managing their supply. Dogecoin issues 5 billion new tokens per year and has no supply cap. The XRP ledger burns a small amount of tokens with each transaction, but the circulating supply has still increased over time. As a result, rising supply weighs on the market prices of both XRP and Dogecoin.
Investors want to own cryptocurrencies for various reasons, and XRP and Dogecoin serve very different purposes. XRP is the native token of the XRP ledger, a blockchain for facilitating cross-border transactions. Meanwhile, Dogecoin is the first meme token and is widely known among crypto investors for its community.
Why XRP Has More Upside and Less Downside Than Dogecoin
The primary reason is that the XRP ledger still has significant potential for real-world applications. Institutions have launched exchange-traded funds for both cryptocurrencies, but the XRP ledger still has enormous potential in payments and finance. The XRP ledger competes against SWIFT, the messaging network that banks use for virtually all cross-border payments.
The XRP ledger is cheaper and faster to use, and could start to see more opportunities now that Ripple Labs, which developed and launched XRP, has ended years-long litigation with U.S. regulators. Ripple Labs launched a stablecoin in late 2024 that could benefit from the Genius Act.
Dogecoin and other meme tokens must stay popular to support their prices. It's still relatively easy for anyone to create and launch meme tokens, which means Dogecoin has plenty of competition for investor money. This is all before factoring in its ever-growing supply.
Meme tokens can be fun, but XRP is the clear choice as a serious long-term investment.
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