Coinbase’s XRP price declined 21% from $ 0.5695 to $ 0.4491 in two days. The decline was accelerated by reports on December 22 that the US Securities and Exchange Commission was preparing a lawsuit against Ripple.
Brad Garlinghouse, CEO of Ripple, said the SEC “voted in favor of the attack on crypto,” citing a Fortune article. He wrote:
“Today the SEC voted to attack crypto. Chairman Jay Clayton picks the winners in his final act and seeks to limit US innovation in the crypto industry to BTC and ETH. We know crypto and blockchain technologies are going nowhere. Ripple has and will continue to use XRP as it is the best digital asset for payments – speed, cost, scalability and energy efficiency. It is traded on more than 200 exchanges around the world and will continue to flourish. “
The XRP price fell around 13% after Garlinghouse’s tweet as some industry executives raised concerns about the situation.
In the meantime, cryptocurrency traders are at odds over where XRP is going next. Some say this may not have a huge impact on the price as Ripple previously faced regulatory hurdles. Others believe that XRP could further stagnate as a result.
The 1-hour XRP price chart (Coinbase). Source: TradingView.com
Ripple’s situation is different from Block.one’s, the lawyer says
One of the main discussion points in the SEC-filed lawsuit against Ripple is the difference between Ripple and Block.one.
Block.one, the company behind the EOS ecosystem, resigned itself to the SEC for $ 24 million prior to active litigation.
Because Ripple expects to be actively involved in litigation, the dealings between Block.one and the SEC are different from Ripple’s case. Jake Chervinsky, General Counsel at Compound Finance said:
“No. The EOS action only dealt with the EOS ERC-20 token in Ethereum, not the native EOS token in the EOS blockchain. Block[dot]One was settled with no active litigation, and by then the ERC-20 token was no longer trading. Here the SEC will claim that an actively traded token is a security. “
Chervinsky also pointed out the possibility that centralized exchanges could temporarily delist XRP while the case is still pending. Since there is no historical priority for this type of regulatory conflict, it remains uncertain. He wrote:
“We will have plenty of time to discuss the benefits of the SEC’s Ripple enforcement action after the complaint is made public. Right now the big question is whether or not centralized exchanges will delist XRP while the case is pending. I bet a lot of lawyers are making 911 calls. “
Immediately after the news broadcast, social media volume for the keyword “XRP” rose sharply, according to analysts at Santiment.
What happens to the XRP price now?
XRP price rebounded sharply in November, breaking a multi-year downtrend as Bitcoin (BTC) price topped $ 18,000. At the time, XRP was experiencing an impulse rally at Coinbase and saw a brief fear of missing out on FOMO’s uptrend in the US market.
Trader and Cointelegraph Markets’ analyst Michael van de Poppe emphasized that a strong retracement is likely after a massive impulse wave. He explained:
“XRP is looking for further corrections as it is testing the $ 0.45 area for the third time, making consistently lower highs. Very natural to see less volatility and a correction after such a surge.”
However, some traders say that after this withdrawal, XRP could potentially consolidate and that the lawsuit could turn out to be a “nothing burger”.
7-day XRP pricing mood. Source: TheTie.io
Meanwhile, other traders argue that regulators’ powerful approach could add to negative market sentiment around XRP and push the price further down. As the graph above shows, sentiment around XRP hit new lows when news of the SEC lawsuit broke out.