Will Global Instability Help XRP, or Hurt It?

With the world order in the process of rearranging itself, it's obvious that we live in interesting times. The next 20 years will see the global economy change dramatically, and the power relations of the countries of the world are guaranteed to change a lot too.

But, as I'm sure you're eager to know, how will the ongoing global instability affect XRP (CRYPTO: XRP) specifically?

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Instability can make the bull case stronger

One big way that XRP could benefit from a rapidly changing world is by being the infrastructure that the financial systems of the near future use to transfer assets to each other.

Cross-border payments are still, for the most part, clunky and expensive. Many banks often rely on correspondent banking, which means they depend on chains of intermediaries that pass funds and messages along, step by step, until funds reach their final destination. Those chains may become disrupted by politics at multiple points, potentially making international payments and money transfers even more cumbersome than before.

On the plumbing level, the XRP Ledger (XRPL) routes payments through order books and automated market makers (AMMs), which, in theory, can substantially reduce the friction of moving value between currencies, and thus across borders. So the chain is a potential workaround for a more complicated money transfer path, assuming that happens.

Furthermore, assuming Ripple, XRP's issuer, keeps onboarding new payment partners, getting permission to operate in new jurisdictions, and building out its suite of financial services that settle using XRP, global instability can strengthen the narrative that alternative settlement tools have a role. In other words, global financial turbulence, even if it's only sporadic or just a little, will probably offer new opportunities to confirm the asset's investment thesis.

Instability usually hurts risk assets

The narrative above may well be proven true. But if it is, there's another narrative that will probably be proven true first, and it's far more bearish.

The main problem here is that when headlines get ugly or when real economic damage starts to pile up (or when financial systems experience real breakdowns), investors often reflexively reduce their exposure to volatile assets first, like cryptocurrency. As a result, crypto rarely gets treated like a safe harbor, which becomes a bit of a self-fulfilling prophecy and ensures that turmoil hurts coin prices. There isn't any reason to believe that XRP will be safe from this dynamic if there's real trouble, especially not in the short term.

Additionally, XRP also carries another important risk to know. Ripple is headquartered in the U.S., and therefore it stays entangled with U.S. policy both in terms of its material reality, and in terms of its reputation when dealing with foreign companies, regulators, and individuals. That linkage will likely be consequential because "instability" as a world-state is not limited to big events like wars and recessions. It also includes economic actions like sanctions, trade retaliation, and politically motivated regulation.

So the takeaway is that if instability looks like episode-based market stress, like the tariff mania in the U.S. in 2025, XRP will probably suffer in the near term before recovering and continuing to do fine. If, on the other hand, instability looks like a slow grind toward a permanently more fragmented landscape of payment and money transfer corridors, it has a better long-run setup.

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.