XRP price dropped to as low as $0.2138 on Binance as three key factors pushed the cryptocurrency down.
XRP price dropped steeply below $0.3 on Dec. 24, hitting as low as $0.2138 on Binance. The selling pressure on XRP has intensified in the aftermath of the high-profile lawsuit filed by the United States Securities and Exchange Commission (SEC) against Ripple.
There are three main factors behind XRP’s sharp price drop, namely the SEC lawsuit, likely delisting by exchanges and worsening market sentiment.
Ripple lawsuit is worse than EOS and KIN, investor says
This isn’t the first high-profile lawsuit or settlement the SEC has had with a blockchain firm or a token.
EOS and KIK both settled with the SEC, and according to Cinnemhain Ventures’ Adam Cochran, they were considered as security violations at the point of sale.
In regards to XRP, Cochran emphasized that the SEC is alleging the cryptocurrency is still in violation of securities law. He said:
“Unlike Kin and EOS, where the SEC alleged the securities violations were just at the point of sale, the SEC is alleging here that $XRP is *STILL* in violation of securities law present day. That means they believe it is currently a security, hence the exchange reactions.”
Several attorneys similarly noted that Ripple could struggle to plead ignorance due to the documents cited in the lawsuit. Hence, the lawsuit becomes more complex for Ripple to deal with, considering that CEO Brad Garlinghouse said he would fight it out. Cochran said:
“They’ve got multiple document points of proof of centralization, acknowledgment of securities issues, and selling practices in writing. There is no room to plead ignorance/stupidity here. They’ve personally named the executives as liable, which the SEC does when they go for a kill shot. This is much more common in fraud action than general securities action.”
Exchange delistings are happening
Cochran also stated that some sources suggested Coinbase had discussions with counsel about the delisting XRP.
Exchanges do not have to delist XRP yet. But, if it is declared a security by the court, lawyers said that exchanges could face various risks and may be forced to delist the token preemptively. Cochran wrote:
“Sources suggesting that Coinbase has already had discussions with counsel about the delisting of $XRP. It seems two potential plans are forming, one which puts the delisting on Friday. Unclear which Coinbase products it will impact but most likely Coinbase and Pro.”
Social media sentiment worsens
Data from Santiment show the social media sentiment around Ripple has significantly declined.
According to Santiment, social media discussions around crypto are still dominated by XRP and the SEC’s lawsuit. Santiment analysts said:
“The topics most prominently being discussed today are dominated by $XRP and #Ripple, as the #SEC has charged the company with selling securities.”
Data from The Tie also shows that the daily sentiment score dropped to its second-lowest level ever this week while tweet volume spiked to record highs.