What happened
After a nice move yesterday, the price of XRP (XRP 8.78%) continued to climb higher today, along with the broader market. Since late afternoon yesterday, the price of XRP traded roughly 9.5% higher as of 11:09 a.m. ET.
So what
There are two main things that seem to be moving XRP, which was created by the company Ripple. The first looks to be tied to the broader crypto market, which shook off recent regulatory concerns and looked toward a potential pivot on interest rates by the Federal Reserve.
The other has to do with an ongoing lawsuit between Ripple and the Securities and Exchange Commission (SEC). In 2020, the SEC sued Ripple for allegedly selling unregistered securities when the company raised $1.3 billion in an initial coin offering.
There has been an ongoing debate between regulators and the crypto community over whether cryptocurrencies should be treated as securities or commodities. This impacts who their primary regulator might be. Most crypto proponents seem to prefer being treated as a commodity, which is primarily regulated by the Commodity Futures Trading Commission (CFTC). Many believe this could be a precedent-setting case as well.
Yesterday, the CFTC sued the large crypto exchange Binance, alleging the company listed unregistered derivative instruments on its platform and that the company has not done enough to prevent money laundering.
Interestingly, though, the lawsuit referred to Bitcoin and Ethereum and other cryptocurrencies as commodities. Many people took that to mean that XRP would also be a commodity and got bullish on the outcome of the lawsuit between Ripple and XRP.
Now what
A ruling on the lawsuit is supposed to be coming soon, and investors have already been pretty optimistic on Ripple’s chances, so this only adds fuel to the fire. Based on other past events and comments from the SEC, it does seem like Ripple is headed for a favorable ruling.
This should also benefit XRP, so there certainly could be further upside, although in these market conditions, I really prefer the more established cryptocurrencies like Bitcoin and Ethereum.
Bram Berkowitz has positions in Bitcoin, Ethereum, and XRP. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
