The cryptocurrency market recovered strongly in 2024, following a protracted bear market that halted capital investments in the sector.
Spurred by soaring institutional interest in spot ETFs, bellwethers like Bitcoin BTC/USD and Ethereum ETH/USD have both surged more than 60% year-to-date, according to data from Benzinga Pro. Additionally, the total cryptocurrency market cap has grown by 55% since the year began,
However, amid the upsurge, XRP XRP/USD, one of the most popular and largest cryptocurrencies, has fallen significantly behind.
The coin associated with Ripple Labs and the XRP Ledger has tumbled 16% year-to-date, making it one of the few large-cap cryptocurrencies to experience negative price action this year.
Benzinga talked to experts to understand the factors dragging down the payment-focused cryptocurrency in what seems to be a bull market.
The Legal Tangle:
Gracy Chen, CEO of crypto exchange Bitget, cited the ongoing legal tussle with the SEC as a significant factor preventing XRP's ascension.
She said legal challenges and regulatory uncertainties surrounding XRP may have created a level of caution among investors.
"XRP has faced criticism and skepticism within the cryptocurrency community due to its centralized nature, pre-mined supply, and association with Ripple Labs. This negative perception may have dampened the demand for XRP and limited its price appreciation compared to other more decentralized and community-driven cryptocurrencies," Chen added.
Recall that Ripple secured a partial win last year after the Judge ruled that XRP is a security when sold to institutional investors but not the general public.
Ripple's Token Sale
Another factor highlighted by Chen was the selling pressure the coin routinely faces due to the actions of Ripple Labs.
"Ripple periodically sells XRP tokens to fund its operations and invest in new projects. This consistent selling pressure from Ripple’s token holdings could be putting downward pressure on XRP’s price, limiting its ability to rally significantly," Chen stated.
Note that Ripple is the largest XRP holder. A recent report suggested that Ripple could execute its largest token dump of 400 million XRP, worth $207 million, in June.
The Approval Of Bitcoin and Ethereum Spot ETFs
Interestingly, Kadan Stadelmann, CTO of blockchain platform Komodo, noted the recent approval of spot Ethereum and Bitcoin ETFs as a reason for XRP’s declining relevance.
He stated, "Ether ETF approval brought a lot of legitimacy to ETH. Previously, XRP was labeled as a cryptocurrency for institutions. Now, it appears that Bitcoin and Ethereum are gaining significantly more momentum in that large sector of the market."
Benzinga reached out to Ripple Labs to respond on the arguments made above.
What Are The Chances Of An XRP Bull Run?
Gracy Chen said that the prospects of XRP's upside look uncertain. Its inability to break through key price levels and sustain the uptrend has kept investors cautious.
Kadan Stadelmann believed that the biggest bullish catalyst for the market would be if the SEC makes a 180-degree pivot.
"If the SEC decides to approve XRP ETFs, that would revitalize the project's hopes of institutional adoption. Due to the ongoing court case, this scenario probably won't happen until at least 2025," he argued.
At the time of writing, XRP was exchanging hands at $0.5196, down 0.13% in the last 24 hours, according to data from Benzinga Pro.
Photo Courtesy: Michaela Jilkova On Shutterstock.com
These insights set the stage for deeper discussions at the upcoming Benzinga Future of Digital Assets event on Nov. 19.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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