XRP and Stellar Payment Coins Struggle to Catch Up to Bitcoin

Market Context and Precedent

Bitcoin has shown signs of recovery after a recent decline, despite the ongoing Federal Reserve's tightening measures and mixed market sentiment. The cryptocurrency's third-quarter trading suggests a tentative rebound, but short-term market conditions remain uncertain.

Institutional Infrastructure Development

The DriveWealth-Ripple partnership uses RLUSD for settlement in Europe, with plans to expand to the US. However, the partnership does not create meaningful XRP demand, as XRP is not required for RLUSD transactions. The deal highlights the growing importance of stablecoins in global investing and the need for institutional infrastructure and regulatory clarity.

Regulatory Clarity and Market Sentiment

XRP's price has surged by over 1% after a brutal Wednesday. Ripple CEO Brad Garlinghouse reaffirmed the asset's legal clarity despite the CLARITY Act's stalled progress. The $1.40 area is seen as a cleaner test of buyers' control.

Market Analysis

Bitcoin gained 8% in 30 days while XRP rose just 1.3% and Stellar 1.8%, leaving both payment coins trailing the market leader. XRP holds an edge with $1.51 billion in ETF assets and was the only major-coin ETF group to record inflows on October 14. Stellar dropped 15.9% in 14 days versus XRP's 10.5% decline and sits 79% below its all-time high compared to XRP's 63% gap.

Investment Advantage and Regulatory Clarity

XRP has an investment advantage that Stellar can't match. US spot XRP ETFs, which directly hold the coin and trade via brokerage accounts, reported net assets totaling $1.51 billion. On October 14, these funds saw inflows of $740,414, marking the only inflow among the four major-coin ETF groups that day. Ripple has also been in the spotlight recently. On October 15, Cross River Bank in New Jersey integrated Ripple's RLUSD stablecoin—a token pegged to the US dollar—into its core banking operations. Ripple Prime, the company's institutional brokerage division, also began offering swaps across more than 100 traditional asset markets on Hyperliquid, a decentralized exchange.

Stellar's Performance

Stellar has a strong six-month performance record. Data from Elan Insights shows that XLM outperformed an index of the top 10 cryptocurrencies for nearly the entire last six months. However, Stellar still leads the index by about 9%, that lead has narrowed significantly since June. Currently, Stellar appears weaker in the short term. XLM has dropped 15.9% over the last 14 days, compared with XRP's 10.5% decline.

Market Outlook

Given the current landscape, XRP seems more likely to catch up to Bitcoin first. It benefits from ETF investors who added funds on October 14, it has outperformed Bitcoin over the previous 60 days, and Stellar's earlier advantage over the top 10 coins is shrinking. However, XRP's ETF inflow is relatively small, and many recent headlines about Ripple don't require anyone to buy the coin directly.

Key Milestones

XRP must regaining a close above $1.52, its October 4 close and about 13% above the current price, with a critical test at a daily close above the $1.66 September high—around 24% higher. If XRP drops below its September low of $1.25 (about a 7% decrease), it could allow Bitcoin to extend its lead. On the flip side, Stellar must close above $0.23, a 26% increase, while slipping below $0.17 could wipe out its remaining lead.

Conclusion

In conclusion, XRP's investment advantage and regulatory clarity may give it an edge in closing the distance to Bitcoin first. However, Stellar still has a strong six-month performance record, and its lead over the top 10 coins is narrowing. The market outlook is uncertain, and it remains to be seen which payment coin will catch up to Bitcoin first.