XRP price struggles to rally to $1 despite regulatory clarity.
XRP price struggles to rally to $1 despite regulatory clarity.
The Blockchain Industry: A Closer Look at Ripple-backed XRP
Introduction
The blockchain industry has seen significant developments recently, with the United States judicial system ruling on the legal status of XRP, a digital asset backed by Ripple. On July 13, District Judge Analisa Torres declared XRP exchanges’ sales as non-security, providing some clarity on the regulatory front. However, the ruling also tied the XRP institutional sales to investment contracts, thus considering them as security under the Howey test. This ruling had far-reaching effects, particularly in relation to XRP’s trading volume and price.
The Impact of the Ruling
The ruling by District Judge Analisa Torres had a profound impact on the XRP market. Although the ruling did not result in XRP hitting the $1 mark, it did prompt most centralized exchanges, including Coinbase Global Inc, to re-list the digital asset for trading. As a result, XRP’s daily traded volume experienced a sharp uptick, reaching up to $14 billion. Additionally, the price of XRP doubled following the ruling, surging from around 46 cents to as much as 95 cents.
However, the recent correction in the XRP market has eroded a significant portion of those gains. Currently, XRP is trading around 62 cents, marking a decrease of more than 25% from its high earlier this year. Furthermore, the average daily traded volume of XRP has dropped to around $1.2 billion, significantly lower than the recent highs.
This correction can be attributed to various reasons, but according to John E Deaton, founder of Crypto-law.us, the ultimate trigger for a parabolic rally of XRP, or any other altcoin, lies with Bitcoin. Historically, major crypto bull rallies have been initiated by the Bitcoin halving event, which is less than a year away. As such, the future movement of XRP’s price may depend on Bitcoin’s performance.
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John E Deaton summarized this interdependent relationship among leading cryptocurrencies on Twitter, stating, “If I had told you #XRP would get regulatory clarity but not hit $1, many wouldn’t have believed it. Likewise, if I had told you PayPal would issue a stable coin on Ethereum but #ETH wouldn’t increase at all, many wouldn’t have believed it. Like it or not, #Bitcoin drives this…”
Ripple-backed XRP Price and Market Analysis
The price of XRP heavily relies on the adoption of Ripple payment products, such as On-Demand Liquidity (ODL) and RippleNet. These products have contributed to the widening utility of XRP, enabling functions such as NFT minting and DeFi operations. Consequently, many experts believe that XRP’s price has the potential to surpass $1 in the near future.
However, the ongoing correction in the XRP market might push the digital asset towards a significant support zone between 53 and 58 cents. These levels were previously observed as resistance before the recent ruling by District Judge Analisa Torres.
Moreover, the mainstream adoption of digital assets is expected to accelerate the utilization of XRP in global cross-border payments. As the fifth largest digital asset, with a market capitalization of approximately $32 billion and deep trading liquidity, XRP is well-positioned for further growth, particularly with the increasing institutional adoption.
It is worth noting that Ripple is already collaborating with several global central banks to develop interoperable Central Bank Digital Currencies (CBDCs). This collaboration further validates the utility and potential of XRP in the global financial ecosystem. Additionally, the XRPL (XRP Ledger) features a private chain that facilitates the seamless issuance and burning of stablecoins by institutional investors.
The Bigger Picture
While the recent ruling by District Judge Analisa Torres provided some regulatory clarity for XRP, it did not fully settle the case with the United States Securities and Exchange Commission (SEC). The SEC, led by Chair Gary Gensler, has expressed disagreement with the ruling and is preparing to appeal in the next circuit. Until the case is completely settled, it is possible that XRP’s price may continue to experience limited upward momentum.
In conclusion, the blockchain industry is evolving rapidly, and the recent developments surrounding XRP highlight its potential and challenges. The regulatory landscape and interdependence among leading cryptocurrencies, particularly Bitcoin, play significant roles in shaping the market. As Ripple continues to innovate and collaborate with global institutions, XRP has the foundation to contribute to a more efficient and inclusive financial ecosystem.
