When Ripples Become Waves

Q9 Capital
4 min readJul 20


20 July 2023

  • XRP rallies 74% after positive Ripple court ruling
  • Trading volumes overtake BTC in frenzy
  • Major exchanges relist the embattled asset

For those who have been patiently awaiting an XRP price pump, your day has finally come.

Late last week a federal court in New York ruled that Ripple did not violate securities law in selling its token (XRP) via public exchanges. That decision cuts against claims by the SEC in both this suit and others against Coinbase and Binance that most cryptocurrencies should be regulated as securities.

In her decision, US District Judge Analisa Torres ruled that XRP itself is not a security. The court then moved to the issue of whether transactions involving XRP could be considered securities transactions. Judge Torres ruled that certain XRP sold to hedge funds and other institutional purchasers amounted to securities transactions. But importantly, Judge Torres also ruled that the XRP sold through exchanges at issue were not securities transactions.

XRP Price, 14 Days

Source: CoinGecko

The announcement was a major catalyst for XRPs price, which soared by 74.2% over the week after many exchanges (Coinbase, Kraken, Crypto.com, and Bitstamp) relisted the token for trading. The asset jumped several places to became the fourth-largest crypto by market cap, currently standing at more than $43bn. This figure was approximately $25bn prior to the judge’s decision.

XRP trading volumes have also shot up dramatically, comprising 21% of total crypto trading volumes, leaving BTC in second position with 20%.

XRP Trading Volumes Overtake BTC

Source: Kaiko

Open interest on XRP-tracked futures climbed above $1.1bn in the past 24 hours, topping the $1bn level touched last week and setting a record high for the year.

Open interest (or the number of unsettled futures contracts) has risen 21% since Tuesday. Higher open interest is a sign of increased bets on an asset as it suggests an inflow of new money into a financial market — usually meaning a current trend is expected to continue. The majority of these positions, $443mn worth, are held on the crypto exchange Binance, followed by Bitget at $250mn.

XRP Open Interest Surges to Record High

Source: Coinglass

XRP’s “social dominance” also pumped. Social dominance, which measures the percentage of discussions related to an asset compared to all top 100 market cap assets, indicates that XRP has shot up to 7.4% of all discussions. This is the highest level of discussion related to XRP since January 2021.

XRP’s Social Dominance Rises

Source: Santiment

More broadly, $742mn has flown into digital-asset funds over the last four weeks — the largest run since the final quarter of 2021. Many other cryptoassets were buoyed by the Ripple news, Coinbase shares rallied and the total market cap of crypto reached $1.25tn.

Source: CoinShares

The Need for Regulatory Clarity

So, is Ripple now classified as a security or not? Well…it depends.

The SEC say they are “disappointed” with the judge’s ruling. Gary Gensler said his agency was still assessing the court’s decision but was pleased with the portion in which the judge held that Ripple should not have sold its XRP tokens directly to sophisticated investors.

We all already know where the SEC stands — everything is a security except Bitcoin and maybe Ethereum — but the SEC isn’t the be all and end all. So now we’re in this weird world where we have a cryptoasset that is an unregistered security sometimes.

Sure, there’s a difference between retail and institutional buyers here since retail did not (and is not) buy XRP directly from Ripple so there cannot be an investment contract between retail investors and Ripple. But its all a bit fragmented. It should be either be classified as a security outright, or it should not. Rather than in this strange limbo.

In the meantime, the ruling reduces the securities overhang on tokens sold on exchanges, and is a major relief for all tokens listed on secondary platforms, but there’s plenty more to come as crypto battles through the courts. The XRP case underscores why we need regulatory clarity in digital assets and why we need to get there much quicker.

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