XRP Price Analysis: Impact of Court Rulings and Liquidity Factors

In the wake of a recent court ruling, XRP, a top 5 cryptocurrency, has seen a significant recent decline in its value, erasing all its gains since 13 July 2023.

On 13 July 2023, a pivotal ruling was delivered by Hon. Analisa Torres, a district judge at the United States District Court for the Southern District of New York, in the SEC vs Ripple Labs lawsuit. Initiated in December 2020, the U.S. Securities and Exchange Commission (SEC) accused Ripple Labs Inc., along with its senior executives Bradley Garlinghouse and Christian A. Larsen, of unlawfully offering and selling securities in violation of Section 5 of the Securities Act of 1933. The SEC further alleged that both Garlinghouse and Larsen aided and abetted these violations. After both parties presented their summary judgment motions, the court issued a mixed ruling.

The SEC’s motion concerning the Institutional Sales was granted, but other matters were denied. Conversely, Ripple’s motions regarding the Programmatic Sales, Other Distributions, and sales by Larsen and Garlinghouse were granted, but their motion on Institutional Sales was denied. The SEC’s claim of aiding and abetting against Larsen and Garlinghouse was also denied. Judge Torres clarified that XRP, as a digital token, does not inherently meet the Howey requirements of an investment contract. She further noted that the secondary market sales of XRP were not considered offers or sales of investment contracts, especially since the funds from these sales never returned to Ripple.

The cryptocurrency market is currently experiencing a bearish trend, with many digital assets, including XRP, facing substantial losses. XRP’s value has reverted to its position before it gained regulatory clarity.

Yesterday, prominent crypto analyst Dr. Benjamin Cowen, who is a seasoned expert in Engineering with a background in Computational Mathematics and Programming, weighed in on the situation. He highlighted that XRP had lost all the gains it had made after Judge Analisa Torres ruled it as a non-security. Cowen emphasized that events like the SEC vs. Ripple case outcome are not lasting drivers for price hikes. He believes that the initial excitement surrounding such events is transient, and the cryptocurrency will eventually revert to its usual trajectory.

Cowen posits that the value of altcoins is more influenced by the presence of excess liquidity in the market than by individual events, such as court case outcomes. Excess liquidity indicates a surplus of investable funds, which, according to Cowen, can potentially push altcoin prices higher.

According to data from TradingView, on crypto exchange Bitstamp, on 12 July 2023 (the day before Judge Torres delivered her landmark ruling), XRP closed at around $0.47104. Then, on 13 July, after Judge Torres’ ruling was unveiled, the XRP price surged to as high as $0.87321. Then, on 17 August 2023, the day that Judge Torres granted the SEC’s request to file an interlocutory appeal regarding two primary decisions from the July 13 ruling, the XRP price fell to as low as $0.43090, which is lower than it was on 12 July 2023. At the time of writing, XRP is trading at around $0.520, up 2.87% in the past 24-hour period.

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