The latest episode in the crypto sector’s bull run has been creating a game of musical chairs in the rankings—and by the looks of things, XRP is struggling to keep its seat.
Just a few short months ago, XRP’s market cap meant that its position in the top three cryptocurrencies was secure. Unfortunately, a confluence of factors has plunged the altcoin’s standing into peril.
The first has been the unstoppable rise of the Tether stablecoin, which now occupies the No. 3 spot after continuing to enjoy an explosion in growth. USDT’s market cap has grown by close to 50% since the year began—with $1 billion being added roughly every three days.
Unfortunately, XRP may not get to keep the No. 4 position as a consolation prize. That’s down to Cardano, which has enjoyed a swift rise up the rankings—helped along by a 58% rise in ADA’s price over the past seven days. Both of their market caps are practically neck and neck at present.
Cardano’s surge is linked to how smart contract functionality has been successfully integrated into the latest iteration of its testnet—fueling optimism the blockchain will be able to woo the incredibly hot decentralized finance (DeFi) protocols and rival the congestion-addled Ethereum network. Proponents argue that ADA’s price could receive another boost when this feature is added to the mainnet.
And although XRP is currently clinging in the top five by its fingernails, just $500 million separates its market cap from that of another DeFi-friendly blockchain, Polkadot. DOT has been dubbed an “Ethereum killer” because of how it enables developers to create their own blockchains—all while achieving interoperability between existing networks. This is regarded by many as crucial if this technology is to achieve mainstream adoption.
Ripple’s next steps
Ripple released its quarterly XRP markets report on Feb. 5, in which it admitted that the U.S. Securities and Exchange Commission’s action against the company has had a “devastating impact” on those who use the altcoin. The SEC alleges that Ripple violated securities laws by selling XRP as unregistered securities. Ripple added:
“While U.S. regulatory action caused havoc and prompted U.S. market participants to withdraw from a massive global virtual currency market, close to 90% of XRP volumes remained intact and many market participants moved forward with business related to XRP outside the U.S. This further underscores the fact that the U.S. is out of step with its international counterparts.”
One of Ripple’s main lines of attack appears to focus on the SEC’s dealings with other digital assets—and how the commission ended up determining that Ether wasn’t a security. The payments company says “no coherent explanation” has been provided to date—but back in 2018, the SEC’s then-director of the division of corporate finance, William Hinman, said ETH had become “sufficiently decentralized” in the years since its initial coin offering.
Currently at $0.4667, XRP tumbled by 77.2% after hitting highs of $0.7680 in late November, just before the legal action was launched—plunging to depths of $0.1748. Despite the fact that there has been no meaningful breakthrough in the lawsuit, XRP ended up nearing these 52-week highs once again last week when it briefly touched $0.7448. The surge was likely linked to a flurry of pumping activity in the wake of WallStreetBets’ battle against GameStop short sellers.