The long standing legal battle between the Securities and Exchange Commission (SEC) and Ripple reached its apparent conclusion after Brad Garlinghouse announced on March 19 that the agency would ‘drop the case’, causing an immediate surge in XRP’s market capitalization.
To be more precise, March 19 saw the token’s market cap skyrocket from $132.66 billion to $148.63 billion. The 12.03% surge was short-lived, however, as the ensuing market-wide downturn proved stronger.
By press time on March 31, XRP’s market capitalization had receded to $122.53 billion, for a total loss of $26.1 billion since the announcement.
What’s more, the downturn might very well continue — at the time of publication, XRP was changing hands at a price of $2.10, marking a 2.32% decline on the daily chart that has brought weekly losses up to 14.60%.
At present, the digital asset is barely in the green on a year-to-date (YTD) basis, effectively trading at the same levels seen on December 31, 2024.
XRP is experiencing outsized losses on account of it previously being an outperformer relative to the wider market and other major cryptocurrencies. While a few silver linings are present, most of the factors at play paint a rather grim, bearish picture for the asset’s near-term prospects.
XRP long/short ratio, whale liquidations, and supply dynamics
First, the good (or rather, positive) news. In the past 24 hours, only 29.38% of XRP positions have been shorts, according to data retrieved by Finbold from Coinalyze.
In fact, despite the fact that the cryptocurrency market has lost roughly $100 billion in market cap over the weekend, the ratio of newly-opened long and short positions has remained stable since Friday, March 28.
Now for the bad news (at least for bulls). On-chain analyst Ali Martinez noted that XRP whales — accounts holding more than 100,000,000 tokens — dumped roughly 1.12 billion units of the cryptocurrency between March 28 and March 31.
Beyond being a bearish signal and sentiment indicator all on its own, this latest development is exacerbated by the fact that Ripple will unlock 1 billion XRP on April 1 in accordance with its escrow schedule.
Ripple has sold more than 900 million XRP since the start of the year. With that being said, a portion of each unlock is re-locked. There is no guarantee that April will be the fourth consecutive month to see sales, but if that does happen, it could put further downward pressure on prices.
Technical analysts are divided on XRP’s prospects
Chart experts and technical analysts continue to present highly disparate views on XRP’s outlook. Veteran trader Peter Brandt outlined a head and shoulders pattern that, if legitimate, could signal the start of a bear run down to $1.
In contrast, trading signal provider Investing Scope detailed a multi-year channel-up pattern on March 28, and if XRP is indeed still within a bullish leg of this pattern, it could reach prices as high as $6.50 by October, when another key catalyst, exchange-traded funds (ETFs), might come into play.
XRP ETF approval could lead to a surge — but will it be too little, too late?
On February 13, the SEC acknowledged Grayscale’s application for a spot XRP fund. This was the first such recognition, although Bitwise filed earlier. This triggered a 45-day review period. Then, on March 11, the agency extended the process, and the current deadline is May 21 — but the final decision might not come until mid-October, as the commission can still request further delays.
However, readers should note that as promising as this prospect is, it won’t have an effect on near-term price action. There’s simply too much volatility at present for traders and investors should go long on XRP because of a possible catalyst in October.
Once all is said and done, market-wide dynamics simply remain too impactful a factor for any singular catalyst to disrupt XRP’s losing streak. It will take either a shift in those dynamics or a significant change in narrative for the cryptocurrency to reverse its present losses.
Featured image via Shutterstock
