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No One Knows Why XRP Is Rallying. Here’s One Explanation
The crypto market works in mysterious ways. Bitcoin and other cryptocurrencies go up (or down), and analysts (as well as investors) often struggle to pinpoint a good reason as to why. This uncomfortable truth has come to the fore yet again, after XRP (aka Ripple’s native token) rallied by 85% in a couple of days, from $0.5678 on April 4 to $1.05 on April 6.
This surge outperformed pretty much every other major cryptocurrency, yet most commentators and journalists didn’t have any compelling explanation for XRP’s sudden jump. However, one piece of positive news — related to Ripple’s ongoing case with the Securities and Exchange Commission — suggests that at least some buyers were motivated by the belief that the cryptocurrency’s fortunes were (and are) changing for the better.
Yes, rather than herd behavior and FOMO, certain investors appeared to believe that Ripple’s April 6 hearing with the SEC would provide encouraging news, with many also beginning to think that it’s likely to win the case outright. And they were right (about the hearing), with the Southern District Court of New York ruling that the SEC should hand over documents related to its classification of bitcoin and ethereum. This potentially paves the way for a few more XRP surges in the near future.
The XRP Rally: Descriptions and Explanations
As recently as March 25, XRP was priced at only $0.477. Yet between, Monday April 5 and Tuesday April 6, the cryptocurrency shot up to $1.05, cementing a 120% increase in less than two weeks.
Source: CoinGecko
At the time, if you tried to look for commentary on why this rally had occurred, you wouldn’t have found much. One news site quoted an analyst as saying that XRP had “all the technical components to rally,” which (insider tip) is tantamount to saying that it’s rallying. It also noted that XRP’s “social volume” is higher than average, which is what you’d expect with a rallying crypto (since higher-than-average rallies tend to generate higher-than-average social interest).
Source: Twitter
The same analyst noted that, after its delistings, the XRP market is fairly small and illiquid, so it’s likely to witness more disproportionate price swings than other coins. This is likely true, but it still doesn’t tell you much, since we’re still left wondering exactly what (if anything significant) triggered the swing in the first place.
To be fair, much cryptocurrency ‘analysis’ is like this, in the sense that what much of it provides is actually a description of the features of rallies rather than an account of what causes them. Still, in this case, there was one piece of relevant Ripple news which very likely helped to instigate the rally.
This was the anticipation of a new hearing, on April 6, in the SEC’s case against Ripple. Even before this date, legal experts were indicating that the hearing could bring very good news for Ripple and XRP.
Source: Twitter
Previous to this tweet on April 4, lawyer Jeremy Hogan had been talking up Ripple’s chances in its case against the SEC. In a YouTube video posted (on March 20) after a previous hearing in the case, he said that one of the judges presiding over the case has been talking about XRP as if it were a currency (rather than a security, as the SEC claims).
“No matter what the SEC may try and argue, a currency and a security are, by definition, in opposite […] These are two different things,” Hogan said.
In other words, Hogan believes Judge Sarah Netburn is already minded to view XRP as a currency rather than a security. Meanwhile, he made a guest appearance on the popular ThinkingCrypto YouTube channel where he reiterates this view, as well as outlines the possibility that crypto-exchanges may legally be able to relist XRP (even if Ripple itself may be in violation of securities law).
Likewise, other crypto-focused lawyers have also recently begun arguing that it’s Ripple which may have the upper hand in its case. For example, CryptoLaw founder John E. Deaton tweeted on April 2 that the SEC’s failure to seek a preliminary injunction against Ripple (as it did in its case against Telegram) reveals that it isn’t confident it will actually win.
Source: Twitter
Basically, a chorus in support of Ripple has been gaining volume over the past few days, creating positive market sentiment that has encouraged investors to buy XRP. This seems to be the most significant cause of XRP’s latest rally, although you can obviously never rule out such things as pump-and-dump groups when it comes to XRP, given their involvement in rallies this year.
Ripple Wins Access to SEC Internal Communications
Legal opinion implied that Ripple had a good chance of gaining access to internal SEC communications on its April 6 hearing, and this was indeed the case. As Jeremy Hogan outlined in a new YouTube video, the SEC now has to share emails concerning its discussions of whether certain cryptocurrencies (in particular bitcoin and ethereum) are currencies or securities.
Source: Twitter
This is likely to help Ripple’s case. If it can find SEC discussions which describe XRP as a currency rather than a security, then it will be boosted enormously. It will also be aided significantly if it uncovers SEC reasoning (on other cryptocurrency) that is also relevant to XRP.
Another mini-rally was sparked by the fact that the latest SDNY court hearing granted Ripple’s request. XRP bounced up to a three-year high of $1.09 early on Wednesday morning (April 7), although it has since retraced back to $0.93 as of writing.
This is still a long way off XRP’s all-time high of $3.40. However, assuming that legal experts are correct in suggesting that Ripple’s case is looking promising, it’s likely that we’ll witness further XRP surges in the not-too distant future. Of course, much can change between now and the next hearing, but for now, Ripple has won the latest battle in its war with the SEC.
