As the observations in the cryptocurrency ecosystem mount fueled by the extreme volatilities of the digital currencies as both the market bulls and bears slug it out in a bid to control prices. It is the new year and while the majority of the top cryptocurrencies ended the past year 2020 in a grand style with remarkable gains, coins like XRP suffered a scary nightmare that resulted in a continuous dump of the coins by its holders.
The dump off created a massive gorge in the price of XRP and it was caused by a lawsuit filed against Ripple Labs, the payment service company that is often associated with the XRP coin by the United States Securities and Exchange Commission (SEC). The lawsuit alleges that Ripple and two of its executives, CEO Brad Garlinghouse and Co-founder Chris Larsen were involved in the sale and distribution of XRP, unregistered security to the tune of $1.3 billion.
The lawsuit placed exchanges in a dilemma as they do not want to get in the crosshairs of the lawsuit. As a result, many began delisting the coin while others halted its trading on their platforms. Investors on the other hand had to respond by selling off their holdings in other not to retain a non-tradeable cryptocurrency asset. Correspondingly, XRP lost over 50% of its value in the past days and week of 2020, arguably the worst of its trading days since the coin was created.
The Beneficiaries of the XRP Dump off: Litecoin Under the Radar
Many of the other cryptocurrencies saw a rise in prices while XRP experienced the most challenging moments in its history. Amongst the top gainers include but not limited to Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC), the cryptocurrency that stands to benefit the most from XRP’s woes.
As most investors pulled out their stake in XRP, many probably used it to take a position in these and other cryptocurrencies, thus creating a complementary rise in the overall outlook of the cryptocurrency market as seen toward the end of last year.
With XRP and LTC competing to hold the position of the fourth-largest cryptocurrency by market cap, the dip in XRP’s price brought down its market cap while LTC saw a gradual increase in its market cap to finally displace XRP against earlier projections. This displacement was temporary as LTC’s bulls were deprived of the opportunity to celebrate the big win even for 24 hours.
What Fueled The Quick Rebounce?
While Ripple noted that it will give a counter-response to the lawsuit ahead of the court showdown scheduled for February 22nd, a small group of XRP investors filed a Petition against the SEC seeking a Writ of Mandamus (an order that will compel the agency to change its classification of XRP as security) in the Rhode Island District Court in order to help protect their XRP coin asset.
The position of these petitioners was not targeted at Ripple but of the XRP coin and that may be attributed to the current surge in XRP’s price, and at the same time, a boost in its market capitalization. XRP is now recovering from the losses of the past days following this petition and Litecoin’s efforts to dethrone XRP as the bigger crypto by market cap may have to wait a little longer if at all it will happen. At the time of writing, XRP’s market cap tops $10.7 billion according to CoinMarketCap while that of Litecoin is pegged slightly above $10.1 billion.