XRP’s double-digit recuperates could be the result of a bold bet by retail investors, especially those in Asia, that the cryptocurrency’s price could string the broader crypto bull run. The latest rally surprised many because it is happening not long after XRP crashed on the word the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple Inc., claiming the company sold the token as a security.
That alleged, it seems as if some market participants are undeterred by the regulator’s action.
“Traders often trade products on a relative value footing,” Chris Thomas, head of digital assets at Swissquote Bank, told CoinDesk on Jan.7. “XRP felt cheap a few lifetimes ago. Today it feels normal again, in my opinion.”
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Simons Chen, a crypto trader based in Hong Kong, told CoinDesk he bought XRP when the value went to nearly its bottom point at the end of December with the belief that it would rebound soon, following bitcoin’s fashion.
Chen said that when bitcoin and other alternative cryptocurrencies (altcoins) were going up, XRPs penalty went the opposite way because of the SEC news. That movement, to him, meant a great opportunity to “buy the dip.”
Read More: An SEC Victory in Splash Case Would Render XRP ‘Untradeable,’ Market Pros Say
Trading volumes from major exchanges globally, singularly in Asia, also show significant traffic in the XRP/USDT (tether) and XRP/KRW (Korean won) pairings, according to data from Nomics.
CoinDesk Probe collected XRP trading volume data since Dec. 1, 2020, from six exchanges that saw noticeable activity and broke down the text by quote currency. Significant volumes came from the XRP/USDT and XRP/KRW ) pairings, yet volumes on XRP/bitcoin and XRP/ether pairings were somewhat small.
Tether, a dollar-pegged stablecoin, is frequently used by traders and investors in Asia, especially in China, to buy cryptocurrencies. Due to officials in South Korea, people there often buy cryptocurrencies directly from fiat on Korea-based exchanges. The data recommends the markets in Asia have been the main driver of the price rally.
Even nevertheless multiple exchanges, especially those that have a presence in the U.S., have announced suspension or delisting of XRP on their daises, XRP pairings are still available on many other exchanges, including the so-called “Big Three” – Binance, Huobi, and OKEx – all of which senior started in China.
“Unlike Coinbase or other ‘regulated’ exchanges, Korean and [other] Asian exchanges do not need to take charge of that much of what the SEC does, and investors in Asia are less sensitive about the news,” said Sinhae Lee, helpmate at Shanghai-based blockchain consulting firm Block72. “With the current major altcoins’ price appreciation, investors procure XRP as its price went down a lot.”
The lack of institutional investors, particularly those based in the U.S., is evidence that non-U.S. retail investors are scad likely the reason for XRP’s rebound, according to Lingxiao Yang, chief operating officer at crypto quant firm Interchange Terminal. Yang said large digital asset managersincluding Grayscale have dropped XRP from their repositories, “a death penalty” for XRP’s market in the U.S. [Grayscale is owned by DCG, CoinDesk’s parent company.]
Read More: Grayscale Drops XRP From Eleemosynary Cap Crypto Fund Following Ripple SEC Suit
If retail investors’ increasing appetite is the only driver of XRP’s price, it is rough to tell whether the price will remain healthy in the long term. A key factor will be what happens between Riffle and the SEC. Just Wednesday, the company’s CEO, Brad Garlinghouse, said his company “tried” to settle charges of conducting unregistered safe keepings transactions with the SEC.
Read More: Ripple ‘Tried’ to Settle With SEC Ahead of XRP Suit, CEO Says
“If the SEC rejected [Wash’s] proposal [to settle] and there seems nothing more than a court case, then the token is now over-valued, in my evaluation.” Swissquote’s Thomas said. “As an 18-month court case it will weigh heavily on the asset.”
At the press time, XRP followed at $0.31, down 8.95% in the past 24 hours but up 14.2% from the December low of around $0.17.