XRP price declined by 21% in two days on Coinbase from $0.5695 to $0.4491. The drop was accelerated by reports on Dec. 22 that the United States Securities and Exchange Commission is preparing a lawsuit against Ripple.
Brad Garlinghouse, the CEO of Ripple, said the SEC “voted to attack crypto,” citing a Fortune article. He wrote:
XRP price fell by roughly 13% following Garlinghouse’s tweet as some industry executives expressed concerns about the situation.
Meanwhile, cryptocurrency traders are mixed about where XRP is headed next. Some say that it might not have an immense impact on the price as Ripple faced regulatory hurdles before. Others believe XRP could continue to stagnate as a result.
One of the main discussion points of the reported lawsuit against Ripple by the SEC is the difference between Ripple and Block.one.
Block.one, the company behind the EOS ecosystem, settled with the SEC for $24 million before there was active litigation.
Since Ripple expects to deal with active litigation, the dealings between Block.one and the SEC are different from Ripple’s case. Jake Chervinsky, a general counsel at Compound Finance, said:
Chervinsky also raised the possibility of centralized exchanges temporarily delisting XRP while the case is pending. Since there is no historical precedence for this type of regulatory conflict, this remains uncertain. He wrote:
Immediately after the news broke, the social media volume for the keyword “XRP” surged, according to analysts at Santiment.
XRP price rallied strongly throughout November, breaking a multi-year downtrend, as the Bitcoin (BTC) price surpassed $18,000. At the time, XRP saw an impulse rally on Coinbase, seeing a brief “fear of missing out” uptrend in the U.S. market.
Trader and Cointelegraph Markets analyst Michaël van de Poppe emphasized that after a massive impulse wave, a heavy retracement is likely. He explained:
Some traders, however, say that after this pullback, XRP may consolidate and that the lawsuit could turn out to be a “nothing-burger.”
“In all seriousness though, $XRP being sued by the SEC will most likely be a nothing-burger. Not the first time,” wrote pseudonymous trader “Loma,” who continued: “The fine probably ends up being a slap on the wrist relative to how much $ they’ve made/have. Market is corrective, most ALTs look like s—. XRP isn’t alone.”
Meanwhile, other traders argue that the heavy-hitting approach of regulators could amplify the negative market sentiment around XRP and push the price down further. As the chart above shows, the sentiment around XRP hit fresh lows as news of the SEC lawsuit was revealed.