A rally divorced from reality. A reader might not be blamed for thinking that, after looking at the payment-focused cryptocurrency XRP’s rally to a three-year high above $1 in the face of lingering regulatory concern.
There’s more to it, according to some observers. The token might be getting price support from the XRP community, popularly known as the XRP Army, CoinDesk’s Ben Powers said during a panel discussion on CoinDesk TV Monday.
In December, the U.S. Securities and Exchange Commission (SEC) filed a case against Ripple Inc., which uses XRP in its payments network, for raising $1.3 billion by selling the token in unregistered securities offerings. While there is no closure yet, the cryptocurrency has climbed to the highest level since March 2018, having erased December’s decline from roughly to $0.60 to $0.20 in recent weeks.
The token’s price is still well off its January 2018 all-time high of $3.30, based on pricing from the cryptocurrency data provider Messari.
“They are still purchasing, they are still trading,” Powers said, referring to XRP’s devoted community. It goes back to the “tribalism of crypto. You know, like people have their camps, and they rep them hard.”
Many feared the cryptocurrency would miss the 2021 crypto bull run because of the shadow of the SEC probe. That pessimism likely stemmed from observers being overly U.S.-centric.
“The SEC can take action, but these are currencies that go beyond just the reach of the U.S.,” Powers said.
Several major western crypto exchanges have suspended XRP trading due to regulatory concerns. However, XRP believers can still buy the cryptocurrency on other, less-regulated exchanges, or on Asia-oriented venues.
Two of the top five XRP exchanges, as per the 24-hour trading volume – VCC and HBTC – are based in Singapore, while Bidesk is based in Australia. Binance, the world’s largest cryptocurrency exchange, does not fall under the purview of U.S. regulations.
It’s quite clear the buying pressure is coming from outside the U.S. It validates cryptocurrencies’ appeal of being censorship resistant – one that governments cannot control.
However, the XRP community’s tenacity and the price rally do not necessarily mean the cryptocurrency’s adoption as a payments mechanism will continue to grow.
“The XRP army is not going to be dissuaded by an SEC enforcement, even if it means that Ripple and XRP could ultimately get iced out of a major financial market,” CoinDesk reporter Danny Nelson said on the panel. “That would presumably have a big impact on its usefulness to other businesses around the world.”