XRP has become one of the most trending cryptocurrencies on social media in the past 7 days after the digital asset saw an enormous rise of approximately 50% within one week. With retail frenzy gaining momentum, large investors are asking one question, is the rally sustainable?
To find the answer, we have to take a look at a wide range of indicators. The first thing is the network activity of XRP. Secondly, the developments in Ripple vs the SEC case. Last, but definitely not least, is the adoption of XRP in the global financial ecosystem.
Most of the time, retail investors are only interested in the price trends of a cryptocurrency and its buzz across the industry. In the case of XRP, one such example is the Reddit frenzy at the start of 2021. XRP Pump discussions took over the social media and online platforms in February 2021 and the digital asset spiked by more than 300% within a few weeks.
However, long-term investors are more interested in the network activity of a cryptocurrency to gauge its fundamentals. Daily active addresses, an important indicator of XRP’s network activity, have increased sharply in the last few weeks, indicating that more holders are interacting on its network. Additionally, there were some positive developments in the Ripple vs SEC case which supported the bullish XRP sentiment. Ripple’s quarterly XRP Markets report pointed out a sharp surge in the adoption of XRPL and RippleNet.
So, coming back to the question, is it possible for XRP to sustain the recent bullish momentum? Analysts believe it is, but the final outcome of the Ripple vs SEC case will have a major impact on XRP’s price.
Optimism
According to Daniele Casamassima, the Chief Executive Officer at Pure Fintech, optimism regarding the latest developments in the Ripple vs SEC case is driving the price jump.
“The price of XRP reached $0.90, making it one of the best performers in the past week with a growth of almost 50%. The payments token regained a market cap of $40 billion, moving above Cardano's ADA and Solana's SOL. The recent price surge is mainly due to the possible outcome of its lawsuit against the US Securities and Exchange Commission. Traders anticipated that the currently sealed legal documents would show that the crypto company got legal advice from an outside law firm which concluded that XRP were not securities,” Casamassima said.
“Some analysts say those developments suggest the case is coming to an end, which could cause further appreciation in XRP's price. Others, however, say XRP could lose favor among investors because newer payments tokens now exist in the market. Ripple published the quarterly XRP Markets Report for Q4 2021 to voluntarily provide transparency and regular updates on the company’s views on the state of crypto markets such as quarterly XRP sales and relevant XRP-related announcements,” he added.
XRP’s Energy-Efficient Nature
Farah Mourad, a Senior Market Analyst at XTB MENA, said that XRP has a strong presence in the global payment network due to its nature as an energy-efficient cryptocurrency.
"XRP continues its rise, while its developer, Ripple, remains in an ongoing investigation by the Securities and Exchange Commission. Investigations should be adding pressure on prices, one might wonder, and investors hate uncertainty more than anything, right? Well, it’s a bit more complicated than that. The positive attitude towards the project isn’t new, if we look at RippleNet blockchain technology for global payments during 2021, we can easily identify it as the most profitable year, part of it, of course, benefited from skyrocketing global momentum, yet a larger part was based on Ripple Labs continuous expansion in terms of partnerships,” she commented.
“What should be more important for investors, is the long-term aspect of the project; the technology, venture capital, efficacy and actual utility. XRP token provides a strong global payment network while being one of the top energy-efficient cryptocurrencies (with 0.0079 KWh per transaction) and with XLS-20 on NFT-Devnet, the token could benefit greatly. Daily price fluctuations are nothing more than noise. But, a judgment leaning in Ripple’s favor would bring more stability and maturity to the token. We still believe it’s the most probable scenario,” Farah said.
Key Drivers
In the opinion of Maria Stankevich, the Chief Business Development Officer at EXMO UK, the Ripple vs SEC case development is not the only reason behind XRP’s price jump.
“Although some analysts say that the value of Ripple (XRP) soared by 30% in a day because of the message of lawyers about a significant approach to the resolution of the company's litigation with the American regulator. Attorneys say the federal judge in charge, Analysis Torrents, issued two court orders last Thursday that brings the trial into its final stages. But, I think that another, more banal event led to a sharp jump in the value of Ripple. A considerable number of exchanges announced a SOLO airdrop for all XRP holders just before the price jump,” she highlighted.
“All XRP holders received Sologenic (SOLO) project tokens for free. So, we saw a surge in active addresses in the cryptocurrency network, which began in mid-January. Such data was provided by the analytical company Santiment. According to analysts, activity on the XRP network is currently at an all-time high, which was last seen in November 2021. By the way, the snapshots of the Ripple holders, which determined the right to receive SOLO, were made back in December 2021, causing a six-fold increase in the token rate, after which it returned to its original rate, losing all profits,” Stankevich added.
