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Ever since reaching its all–time high in the 2017-2018 bull run, XRP has not been able to gain that immense value again due to a variety of reasons. However, during the last 4 years, many financial institutions seemed eager to adopt it for efficient settlements and that’s when the industry starting realizing its real value.
Fast forward to 2020, the US Securities and Exchange Commission has filed a lawsuit against Ripple Labs Inc. for potentially selling unregistered digital securities worth about $1.3B. It caused a sudden distrust in the market, resulting in XRP’s price to nosedive as investors liquidated their funds and several prominent exchanges also started delisting XRP (particularly the ones that fall under the US jurisdiction) because if SEC wins the lawsuit, these exchanges could be charged a hefty penalty fee for allowing their userbase to trade XRP (i.e. unregistered security).
Please note that since the coin’s market cap is still quite bullish and positions it in the top 5 cryptocurrencies, we have yet to see the long-term implications of this lawsuit. If SEC wins this case, this could mark the end for XRP, but it won’t be quite easy to win the case either, given the backing that stands with Ripple Labs Inc.
From the investment point of view, XRP is more of a bet, at least until the case gets resolved, as the price is quite volatile and has exhibited several portfolio-effecting dips and gains in 24-hour periods.
As a result of this ‘confusion’, XRP’s rival ‘XLM’ started gaining traction and managed to surge towards its two-year highs, allowing it to double the price in just 14 days after SEC’s action. Moreover, since the daily trading volumes have also increased exponentially, the price surge seems sustainable and cannot just be labeled as a ‘bubble’, as happened previously to many altcoins. Please note that another major reason for XLM’s price increase is US OCC’s decision that now allows the banks to utilize dollar-pegged stablecoins and blockchain technology in order to enhance their settlement infrastructure. Adding more to the hype, it was reported that the Ukrainian government also adopted Stellar blockchain to build its Central Bank Digital Currency. Therefore, such types of news have created a perfect nurturing environment for XLM, particularly when its major rival is facing a lawsuit.
While the industry may seem worried in regards to the fate of cryptocurrencies, XRP in particular, Ripple Labs Inc. is quite eager to defend its stance from the first day and the company was (to some extent) anticipating such an incident to come about around this time. Regardless of their motivation to fight this case, it cannot be ignored that it’s indeed a very rough tide for Ripple as the company is not only trying to defend themselves in the court but in the crypto industry as well, where liquidity might become a major problem very soon if exchanges continue delisting XRP at the current pace.
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