XRP Drops 24% In 2 Hours Shortly After Relief Rally: Analysis

XRP drops 24% in only two hours after the relief rally ended and after Bitstamp announced that they are planning on stopping on XRP withdrawals because of the SEC lawsuit, as reported previously in the Ripple news.

XRP drops 24% in light on the Securities and Exchange Commission lawsuit and also because Bitstamp said that they will stop  XRP Trading for US customers as the exchange wrote:

 “In light of the recent SEC filing against Ripple Labs Inc., which alleges that XRP is a security, we are going to halt all trading and deposits of XRP for our US customers on 8 January 2021 at 9 PM UTC. We will closely follow the unfolding situation and continue to adapt accordingly. Our US customers will still be able to withdraw XRP from Bitstamp. Customers from other countries are not affected.”

Bitstamp is the first among the few crypto exchanges to stop XRP Trading for US Customers and the market was quick to react which eventually led the cryptocurrency to drop by 24% in a short period of time. Adam Cochran who is a partner at Cinneamhain Ventures explained that the exchange was the first major partner of the cryptocurrency. As such, Bitstamp also became the first to restrict XRP Trading which came as a bit of a shock:

 “It was their first major partner, and it was the backend for Simplex, CoinMama and other credit card processors. It’s also an exchange that historically didn’t care about US regulators and shows how serious this SEC case is compared to others.”

According to Bruce Fenton, the CEO at Chainstone Labs, crypto exchanges will be pressured to delist or stop withdrawals of the asset for US customers. Fenton also suggested that the exchanges have no other choice:

 “Here is the relevant part of the Securities Exchange Act that explains that it’s illegal to sell securities without registering with the SEC as a broker dealer. This is why crypto exchanges will have no choice but to delist or freeze XRP for US customers. No major crypto exchange is SEC registered in a manner that would allow XRP to trade – even if they were, XRP isn’t set up to be listed right now.
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The risk for the asset in the near future is the threat of major exchanges following the path of Bitstamp. The price of the asset saw a huge relief rally over the past 24 hours which was expected to provide stronger momentum after a capitulation-like drop. However, the sudden 24% fall in the XRP price, changed the market trend and the traders are now expressing more concerns about it. another trader said that other coins could suffer as a result of the XRP crash:

 “XRP tanks and all altcoins tank against bitcoin. I’m holding my ETH spot bag and not catching knives against momentum on levered altcoin perps. IF $BTC goes crazy towards $30K, altcoins dive down. Wait for bitcoin parabola before punting IMO. XRP news bad for altcoins, perhaps.”