Gauging the ‘Ripple’ effects as XRP surges, flips BNB

• XRP became the fourth-largest cryptocurrency in terms of market cap.
• The 24-hour volume exceeded $9.5 billion but traders may need to watch out for a cool-off period.

A few hours after the New York Southern District court ruled in favor of Ripple [XRP], the token’s price exploded. According to CoinMarketCap, XRP climbed by almost 90%, tapping $0.88 in the process.

Is your portfolio green? Check out the Ripple Profit Calculator

The case, which began in 2020, may not have come to an end. But the fact that the judgment noted that XRP was not a security seemed like a step in the right direction for Ripple. 

Though the court concluded that XRP did not satisfy the Howey test conditions, the case would still go to trial. This was because the same judgment agreed with the SEC that Ripple sold XRP as an investment contract.

However, XRP’s reaction to the development did not end with its price action. 

XRP rules over USDC, BNB

Rather, the token’s market cap, which stood at sixth place before the announcement, surpassed Circle [USDC] and Binance Coin [BNB]. At press time, XRP’s market cap almost doubled to $42.93 billion. 

The rise in the market cap means that a lot of XRP was in circulation thanks to the price increase. Following the news, whale transactions on the Ripple network hit their highest all year long. 

According to Santiment, the number of $1 million XPR transactions went as high as 90 on 13 July. On the same day, $100,000 XRP transactions rose to 872. This marked the highest the token had seen in the whole of 2023. That, in turn, resulted in a 1233% volume hike.

Source: Santiment

However, Santiment’s insight into the Ripple network showed that a number of market participants could have been prepared for D-day. The on-chain analytic platform revealed that addresses that hold between 100,000 to 10 million tokens accumulated 837.81 million XRP since 6 May.

This implies that the cohort had substantial confidence that the ruling would be in XRP’s favor long before the ruling. Besides the activity on-chain, Coinbase announced that it would re-enable XRP trading on its platform.

Socially trading on the prodigal exchange  

In November 2022, the exchange announced that it was delisting XRP alongside a few other tokens. At that time, Coinbase highlighted “low usage” as its reason for the decision. 

But less than an hour after the ruling, the exchange announced that the token would be available for trading almost immediately.

However, Coinbase was not the only exchange positively affected by the judge’s ruling. According to CoinMarketCap, the XRP/KRW pair had the highest trading volume on South Korean’s exchange Upbit.

At press time, the volume was as high as 2.31 billion. This hike represents higher liquidity into XRP while enabling strength behind its price action. 

In between all of this, XRP’s funding rate maintained a positive reading. Typically, the funding rate shows the periodic amounts paid between short and long traders with open perpetual contracts.

When the funding rate is negative, it means that the larger sentiment is bearish. In this case, short traders pay a funding fee to longs. But since XRP’s funding rate was positive, it implied that traders were mostly bullish and long positions dominated.

Source: Coinglass

Another area where XPR excelled after the judgment was LunarCrush’s Altrank. Designed to access a cryptocurrency’s traction and social engagement, the Altrank compares the performance of an altcoin relative to Bitcoin [BTC].

Therefore, hitting the top spot meant that no other altcoin matched XRP’s dominance in market and social activity. 

Careful! Is this the top?

Perhaps, it is necessary to also consider the rate of returns since the price spike. So, in doing this, we look at the Market Value to Realized Value (MVRV) ratio. At press time, the seven-day MVRV ratio was 41.63%.

This ratio measures tops and bottoms depending on the market cycle while considering traders’ buying and selling behavior. When the MVRV ratio surges, it suggests that speculators have a higher market value than holders.

Conversely, a decrease implies that holders have a higher market value than speculators. So the spike may call for caution as it tends closer to the market top, with traders taking realized profits. 

Source: Santiment

Santiment’s 13 July analysis also agreed with this notion. According to the on-chain information portal, the XRP win is undoubtedly a bullish signal. 

However, it also noted that traders may need to wait for a cool-off period or consider an MVRV ratio retracement before searching for a good entry point. 

Realistic or not, here’s XRP’s market cap in BNB’s terms

It also seemed that the possibility had become a reality based on liquidations in the market. For most of 13 July, short suffered as much as $31 million in liquidations, according to Coinglass.

Additionally, long-leveraged positions were also affected as XRP’s uptick dwindled. At the time of writing, long and short forceful position closures were almost equal.

Source: Coinglass