Ripple Lawsuit: Wins Aren’t Moving XRP

Ripple Labs appears to be winning its lawsuit, but the price of XRP (CRYPTO:XRP) isn’t moving. Why’s that?

| More on:
Coworkers standing near a wall

Image source: Getty Images

Ripple Labs keeps racking up procedural wins in the XRP (CRYPTO:XRP) lawsuit, but they aren’t moving XRP’s price. Just a few weeks ago Ripple got Judge Sarah Netburn to refuse the SEC’s request to have several documents barred from the trial. These documents — transcripts of damaging comments by SEC official William Hinman — provide valuable evidence for Ripple to use at trial.

So, everything seems to be going smoothly for Ripple and XRP.

The question is, why isn’t this moving XRP’s price? Since I started covering the XRP lawsuit back in March, XRP has gone from $0.88 to $0.42. This isn’t exactly extreme bullishness. In this article, I will explore a few possible reasons why Ripple’s lawsuit wins aren’t moving the price of its token.

List of wins Ripple has accumulated

Before exploring why XRP hasn’t gone up, we need to examine the nature of the SEC’s lawsuit against Ripple Labs.

The SEC is accusing Ripple of running an unregistered securities offering. When you issue a stock or a bond in the U.S., you have to first register it with the SEC. Not doing so is illegal. Ripple sold XRP tokens without registering them. Initially, the SEC believed that this was OK, as evidenced by agency bigwig William Hinman’s statement that Ethereum wasn’t a security. However, the agency abruptly changed its approach a few years later, coming out of left field to sue Ripple for an unregistered offering.

Since the lawsuit was filed, Ripple Labs has racked up a number of procedural wins:

  • Ripple got a judge who ruled that Ether isn’t a security deposed.
  • Hinman’s statements on crypto were allowed in trial — twice!
  • Ripple forced the SEC to turn over documents detailing crypto trading by its own staff.

The pre-trial hearings definitely look like they’re moving in Ripple’s direction. The question is, why isn’t all of this good news moving XRP’s price?

Why isn’t XRP going up?

Ripple winning the SEC lawsuit would be a positive for XRP. It would leave Ripple Labs with more money to spend developing and improving the blockchain. So, it seems strange that XRP is declining in price as all these wins accumulate. However, there are some pretty straightforward explanations that make sense of what’s going on:

  1. Crypto in general is going down this year. Cryptocurrencies are strongly correlated with one another, and crypto in general is going down this year. None of the large-cap cryptos are up for the year; most are down by double-digit percentage points.
  2. Interest rates are rising. Central banks are raising interest rates this year, and that makes risk assets like crypto less appealing. When you can get a higher return risk-free from treasury bills, that makes risk assets like XRP less attractive.
  3. The Terra scandal. A few weeks ago, the “stablecoin” Terra collapsed in value, losing its peg to the U.S. dollar. This prompted mass panic in the crypto space, leading to most coins falling to various degrees.

As you can see, the crypto scene just isn’t in a good place right now. XRP may be falling, but that doesn’t mean that Ripple Labs won’t win the lawsuit. It does, however, somewhat undermine the idea that a Ripple win will lift the XRP token.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Button has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Ethereum and Terra.

More on Investing

woman analyze data
Investing

Why I’d Buy Nvidia Stock Even at Today’s Prices

Nvidia’s dominant position in the AI space and the ongoing demand for its GPUs suggest that the stock’s upward trajectory…

Read more »

stock analysis
Dividend Stocks

1 Dividend Superstar I’d Buy Over TD Bank Stock

TD (TSX:TD) stock may look undervalued, but there are reasons for the price drop. Meanwhile, this dividend superstar has more…

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Wednesday, July 17

Trading just below the key psychological level of 23,000, the TSX Composite has been posting fresh record highs for four…

Read more »

A steel grain silo storage tank with solar panel in a yellow canola field in bloom in Alberta, Canada.
Dividend Stocks

Down by 26.77%: Now Might Be the Perfect Time to Buy Nutrien Stock

This TSX stock has seen share prices fall by over 26% from its 52-week highs, but it might be the…

Read more »

Woman has an idea
Dividend Stocks

2 No-Brainer Stocks to Buy Now With $7,000

Two relatively cheap cash cows are no-brainer buys for investors with $7,000 to invest.

Read more »

dividends grow over time
Dividend Stocks

Buy This High-Yield Dividend Stock in July 2024

Buy this high-yielding dividend stock to lock in inflated yield into your portfolio to generate solid passive income for years.

Read more »

Double exposure of a businessman and stairs - Business Success Concept
Dividend Stocks

Where Will Dollarama Stock Be in 3 Years?

Dollarama stock has done incredibly well during economic uncertainty, but what about when the markets recover in the next three…

Read more »

edit Woman calculating figures next to a laptop
Tech Stocks

How to Buy UiPath Stock in Canada

UiPath is a beaten-down AI stock that trades at a massive discount to its earnings growth. Is the tech stock…

Read more »