Ripple’s XRP digital token has fallen out of the list of top five cryptocurrencies, when ranked by market capitalization. Dwindling investor confidence and an uncertain future has caused XRP to slide to number seven, behind Binance Coin, Polkadot, and Cardano.
Ripple’s token repeatedly challenged Tether for the #3 spot over the past several years. However, the recent sideways price movement has not done the token any favors — especially during a market-wide rally.
Limited Future Prospects for Ripple?
Ripple has found itself in hot water ever since the US Securities and Exchange Commission (SEC) sued it over securities fraud. In a press release issued Dec. 22, 2020, the SEC alleged that Ripple raised funds in an unregistered securities offering — worth around $1.2 billion in total. Two top Ripple executives, Christian Larsen and Brad Garlinghouse, reportedly also held personal XRP sales worth approximately $600 million.
The lawsuit was reportedly the final enforcement move undertaken by outgoing SEC Chairman Jay Clayton. He resigned from his post only a few days later, on Dec. 23, 2020.
In a rebuttal, Ripple’s Garlinghouse said that the SEC was wrong on both facts and its application of the law. A follow-up document released by Ripple stated that the XRP token was meant to be used as a functional currency, similar to Bitcoin.
The company also claimed that XRP does not pass the Howey test, which would disqualify it as a security. Finally, they maintained that the digital token sale was never meant to serve as an investment contract.
While an early settlement was always unlikely for a case of this magnitude, the confirmation was enough to send XRP’s price tumbling. Between Feb. 14 and 16, the token dropped by 20% while the rest of the market enjoyed upwards momentum. Still, it is worth noting that XRP’s price has more than doubled since last month.
XRP Unlikely to Fall Out off Top 10 List Anytime Soon
Early this month, a group of speculative traders called for XRP investors to ‘buy and hold’ the digital token. A now-deleted Reddit post on r/Ripple titled ‘Why the pump WILL work on Monday’ claimed the buying pressure would push XRP to new resistance levels. The post concluded,
“At 7:30am CST on Monday, hundreds of thousands of people are going to be buying XRP.”
Indeed, two Telegram groups with 300,000 members between them advocated for mass XRP purchases at exactly the same time. This coordination managed to pump the token’s price to $0.75 — a two-month-high. Within minutes, however, the momentum reversed — sending XRP’s price and valuation tumbling. Nevertheless, it managed to find support between $0.30 and $0.40 over the next few days.
Today, XRP trades at around $0.56 — a far cry from its momentary high of $0.80 earlier this year. While both Ethereum and Bitcoin have surpassed their former all-time highs, Ripple is 80% down since its $3.40 high.
With a market capitalization of $25 billion though, it’s unlikely to be dethroned by the next largest cryptocurrency anytime soon. Litecoin, the cryptocurrency ranked eighth by valuation, has a nearly 40% smaller market cap than Ripple.