Why a High XRP Price Is Good for Holders and Essential for Banks

Despite XRP currently trading at $1.39 and being down 63% from its peak, the utility of XRP for large-scale payments, particularly by banks, is fundamentally tied to its price. Ripple CTO David Schwartz articulated this concept eight years ago, explaining that higher XRP prices are necessary for efficient, high-value transactions.

The Logic Behind Higher Prices

Schwartz's argument, highlighted by crypto analyst Levi, states that the XRP needed for a $1 million payment will always cost at least $1 million. He further noted that higher prices correlate with increased liquidity, which in turn leads to cheaper payments. If XRP were trading at a very low price, such as five cents, acquiring the vast amount needed for a billion-dollar transaction would cause significant price slippage, rendering the process impractical for banks. A higher market capitalization ensures that such transactions have minimal impact on the price, making a high XRP price a requirement for institutional adoption.

Ripple's Strategy and RLUSD

Ripple's recent strategic moves, including the expansion of its stablecoin, RLUSD, on the XRP Ledger (XRPL), align with Schwartz's long-term vision. The company aims to capture a share of the $33 trillion stablecoin market. Crucially, every RLUSD transaction on the XRPL necessitates XRP for gas fees. This strategy allows banks to transact without slippage concerns while keeping XRP central to the network's operations. Schwartz's plan involved starting with smaller currency corridors, like Euro to INR, where margins are thin and inefficiencies are high, before scaling up to major global currencies.

Developing Infrastructure and Market Signals

Significant developments have occurred since Schwartz first proposed this strategy. Ripple secured conditional approval for a national trust bank charter from the OCC in December 2025. Mastercard also added Ripple to its global Crypto Partner Program on March 11, alongside other major players like Binance and PayPal. In March, Ripple launched a $750 million share buyback, valuing the company at $50 billion, a 25% increase from its November funding round. This higher valuation of its equity, while the token trades at lows, suggests confidence from Ripple's leadership. Additionally, on-chain data indicates that XRP's multi-exchange withdrawal delta has reached an all-time low, with more investors moving XRP off exchanges, a historically bullish sign for long-term holders. These real-world developments are beginning to validate Schwartz's foundational argument.