XRP’s price dropped by over 12% to $0.381 on July 5, hitting its lowest level in three months. This decline mirrors broader negative trends in the cryptocurrency market, driven by significant Bitcoin sell-offs and renewed concerns about regulatory actions against Ripple.
Bitcoin Sell-offs and Mt. Gox’s Impact
The drop in XRP’s price can be traced back to two main factors:
- German Government’s Bitcoin Liquidation: Reports indicate that the German government is selling hundreds of millions of dollars worth of Bitcoin seized from criminals. Despite retaining $2.4 billion in cryptocurrencies, the liquidation has spurred market panic.
- Mt. Gox’s BTC Repayments: The defunct Mt. Gox exchange has begun returning over 140,000 BTC to its creditors. This has raised concerns about how much of the $8 billion in Bitcoin will be sold, adding pressure to the market.
These events have negatively impacted smaller cryptocurrencies like XRP, Ethereum, and BNB, which are closely correlated with Bitcoin. As of July 5, XRP had a daily correlation coefficient with Bitcoin of 0.94, indicating that traders may be selling altcoins to cover losses from Bitcoin market fluctuations.
SEC’s Stance on Ripple
Adding to the pressure on XRP, the U.S. Securities and Exchange Commission (SEC) reaffirmed its $2 billion penalty demand against Ripple. This came after the SEC lost a lawsuit against Binance, which involved allegations of illegal sales of Binance’s native token, BNB. Although the SEC faced a legal setback against Binance, it has maintained its $2 billion penalty against Ripple, increasing market uncertainty.
Ripple has contested this penalty, proposing a reduction to $10 million. The SEC’s firm stance has contributed to XRP’s 20% drop since the filing.
Liquidation of XRP Long Positions
XRP’s price decline has been further amplified by the liquidation of long positions in the XRP Futures market. In the last 24 hours, over $7 million worth of long positions were liquidated, while only $298,370 worth of short positions were closed. The forced selling of long positions by bullish traders has intensified the downward pressure on XRP’s price.
Summary Review: XRP’s significant price drop today is primarily due to a combination of market-wide Bitcoin sell-offs and renewed regulatory pressures from the SEC. The German government’s large-scale Bitcoin liquidation and Mt. Gox’s ongoing repayments have contributed to market anxiety, particularly impacting altcoins like XRP. Additionally, the SEC’s firm stance on maintaining a $2 billion penalty against Ripple has increased uncertainty, exacerbating XRP’s decline. The liquidation of long positions in XRP futures has further accelerated the price drop, highlighting a challenging period for the cryptocurrency.
Disclaimer: Remember that nothing in this article and everything under the responsibility of Web30 News should be interpreted as financial advice. The information provided is for entertainment and educational purposes only. Investing in cryptocurrency involves inherent risks and potential investors should be aware that capital is at risk and returns are never guaranteed. It is imperative that you conduct thorough research and consult with a qualified financial advisor before making any investment decision.
