Bitcoin

3 reasons why the price of XRP can continue to fall after a 63% drop in four days

By admin on Dezember 24, 2020 0 Comments

The price of XRP fell to just $0.2138 at Binance, as three key factors caused the crypt currency to fall.

The price of XRP fell sharply below $0.3 on December 24, reaching $0.2138 at Binance. Sales pressure on XRP has intensified following the high profile lawsuit filed by the US Securities and Exchange Commission against Ripple.

There are three main factors behind the sharp drop in XRP prices, namely SEC demand, likely delisting by exchanges and worsening market sentiment.

MoneyGram distances itself from Ripple, says it does not use RippleNet

XRP/USD daily sail chart (Coinbase). Source: TradingView.com
Ripple’s demand is worse than EOS and Kik, says investor
This is not the first high level lawsuit or agreement that the SEC has had with a blockchain or token firm.

EOS and Kik were set up with the SEC, and according to Adam Cochran of Cinnemhain Ventures, were considered to be point-of-sale securities violations.

As for XRP, Cochran emphasised that the SEC claims that cryptomoney continues Bitcoin Aussie System to violate securities law. He said:

„Unlike Kin and EOS, where the SEC claimed that the securities violations were only at the point of sale, the SEC is claiming here that XRP MAY be in violation of securities law today. That means they believe it is currently a security, hence the exchanges‘ reactions.
Several lawyers also pointed out that Ripple may have difficulty claiming ignorance because of the documents cited in the lawsuit. Therefore, the lawsuit becomes more complex for Ripple to deal with, given that the CEO, Brad Garlinghouse, said he would fight. Cochran said:

„They have multiple points of evidence of document centralisation, securities issue recognition and written sales practices. There’s no room to plead ignorance/stupidity here. They have personally named executives as responsible, which the SEC does when they go for a kill shot. This is much more common in fraud action than in general securities action“.
The exchanges are taking the token off their lists
Cochran also stated that some sources suggested that Coinbase had discussions with lawyers about removing XRP from its list.

Exchanges do not have to remove XRP from their lists yet. However, if the court declares it a value, the lawyers said that the exchanges could face several risks and could be forced to remove the token preventively. Cochran wrote:

„Sources suggest that Coinbase has already had discussions with the lawyer about removing XRP from its list. It appears that two potential plans are forming, one that will result in the token being removed from the list on Friday. It is not clear which Coinbase products will impact, but it is most likely that Coinbase and Pro will.
Social media sentiment worsens
Santiment’s data shows that the social media sentiment around Ripple has worsened significantly.

Bitwise drops its position on XRP because of the SEC’s lawsuit against Ripple

The most important and talked about topics of the day in crypto space. Source: Santiment
According to Santiment, social network discussions around cryptomonies are still dominated by the XRP and SEC demand. Santiment’s analysts said:

„The most prominent issues being discussed today are dominated by XRP and Ripple, as the SEC has accused the company of selling securities.

Daily sentiment score vs. volume of tweets. Source: The Tie
The price of XRP falls by 24% in 24 hours as exchanges start to remove it from the list
The Tie data also shows that the daily sentiment score fell to its second lowest level this week, while the volume of tweets rose to record levels.

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