Ripple (XRP) has experienced a sharp downturn, surprising many investors given recent developments that appeared favorable for the cryptocurrency. While other digital assets rallied, XRP’s price has plunged, raising questions about its performance and future prospects.
The origins of Ripple’s ongoing legal saga date back nearly four years when the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple. The agency accused Ripple and two executives of illegally raising $1.3 billion through XRP sales, classifying them as unregistered securities. Despite the prolonged legal battle, Ripple secured partial victories, including a favorable ruling this summer that appeared to bring the case close to resolution. A U.S. judge ordered Ripple to pay $125 million to settle, but the SEC, led by Chair Gary Gensler, appealed, extending the conflict.
Donald Trump’s victory in the November 5 presidential election reshaped the landscape. Trump had pledged to dismiss Gensler, a move eagerly anticipated by the crypto community. Rather than face dismissal, Gensler announced his resignation, effective January 20. Trump’s nomination of pro-crypto figure and former SEC Commissioner Paul Atkins further fueled optimism for Ripple and the broader cryptocurrency market.
XRP initially responded positively, skyrocketing from $0.60 a month ago to nearly $3 earlier this week—a staggering 400% increase. However, the bullish momentum didn’t last. Over the past 24 hours, XRP has dropped 12%, falling below $2.30 and losing its position as the third-largest cryptocurrency to Tether. Its market cap now stands at $130 billion, sparking confusion among investors.
The unexpected decline is likely a case of “buy-the-rumor, sell-the-news.” XRP’s rally was driven by anticipation of regulatory changes and optimism surrounding a friendlier SEC under Trump’s administration. Now that these developments are materializing, investors appear to be cashing out, leading to the token’s sudden drop.
Despite this dip, the evolving regulatory landscape and Trump’s pro-crypto stance could still bolster XRP in the long term. For now, the token’s short-term volatility underscores the unpredictability of crypto markets.