The past week has been turbulent for XRP, the digital token majorly distributed by Ripple, as it faced substantial price swings and heavy selling pressure from large investors. These fluctuations appear deeply intertwined with Ripple’s ongoing legal challenges and the recent demand for a $2 billion fine from the SEC.
The SEC’s case against Ripple hinges on the argument that XRP functions as an investment contract and thus should fall under securities regulations. Ripple counterargues that the digital asset primarily serves as a digital currency in a global payments network, claiming distinction from traditional securities. This complex legal battle and its surrounding uncertainty have contributed to the instability of XRP’s price.
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Whales React to SEC Fine
On March 25th, Ripple’s Chief Legal Officer (CLO) Stuart Alderoty, in a post on X, revealed that the SEC had intensified its legal battle with Ripple Labs, requesting a New York judge to levy $2 billion in fines and penalties against the company. The SEC alleges that Ripple illegally sold XRP as an unregistered security when directly marketing the coin to institutional investors.
According to Santiment, a cryptocurrency data analytics platform, investors holding at least 1 million XRP (approximately $580,000 worth) reacted to the SEC’s official filing on March 29th with a major sell-off.
These ‘whale’ investors shed over 290 million coins in a matter of days, bringing their collective holdings to a 30-day low of 44.9 billion. This translates to the dumping of roughly $170 million XRP.
The XRP community’s response to these events has been mixed. Some long-term holders express unwavering support for Ripple, believing in the project’s value beyond the current legal hurdles. Others voice concerns about the potential long-term effect of the SEC’s actions, not only for XRP but for the broader cryptocurrency landscape.
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Read Also: Ripple Faces Possible $3 Billion Fine, As XRP Lawsuit Takes New Turn: Details
Potential Price Impacts
The massive influx of XRP into the market naturally creates downward pressure on the coin’s value. According to data from CoinMarketCap, XRP is currently down 6.74% in the last seven days and trades at $0.572. Also, according to Coinglass’s data, XRP’s options volume has fallen 46.57% since the start of the sell-off, indicating a drop in buying and selling activity.
The recent whale activity and diminishing funding rates point towards further XRP price declines. Retail traders, often hesitant to oppose the strategies of wealthy investors, may adopt similarly bearish positions. This could hinder XRP’s potential for a substantial rebound in the immediate future.
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