Why Is XRP Dropping? Is It Still Worth Holding XRP Amid Market Fluctuations?

Lark Dewis, entrepreneur and crypto investor, recently shared his views on XRP’s potential through a post on X. He explored the impact of the SEC case, recent developments, and XRP’s price trajectory, asking the critical question: Is XRP still a good investment? Let’s dive into his analysis.

XRP has lately surprised the community with its captivating gains. It is up by over an impressive 35% in the past week, currently trading at $2.29. In a couple of weeks, it broke through the one-dollar barrier and had an impressive run to almost three dollars, which is an impressive three-fold increase, Dewis noted.

However, is it still worth holding? Or is it just the altcoin season effect? Dewis has delved deeper, considering the various factors leading to its ups and downs. 

SEC Case and Its Impact

The SEC filed a lawsuit against Ripple Labs in 2020, alleging that XRP was sold as an unregistered security. This led to a significant price drop and delistings on major exchanges. However, the legal landscape shifted in July 2024 when a court ruled that XRP sales on public exchanges do not constitute securities transactions, restoring confidence among investors.

What’s Driving XRP Adoption?

Dewis pointed to a recent MessariCrypto report, “State of XRP Ledger Q3 2024,” outlining several significant advancements for XRP:

1. Introducing Native Smart Contracts
   Ripple and the XRP community are working on a proposal to add native smart contracts to the XRP Ledger (XRPL). This upgrade would enhance the platform, enabling decentralized applications and expanding its use cases.
2. Transaction Growth and Adoption
   • Daily transactions on the XRP Ledger have surged by 94% quarter-over-quarter, reaching 1.7 million.
   • The number of new addresses increased by 10%, reaching 105,000—showing growing interest in XRP.
3. Ripple’s Stablecoin RLUSD
   In August, Ripple began private beta testing for RLUSD, a USD-pegged stablecoin, on the XRP Ledger and Ethereum. While awaiting NYDFS approval, its launch could significantly boost adoption and utility for the XRP ecosystem.
4. Native Lending Protocol
   Ripple is developing a lending protocol to allow users to lend and borrow assets like XRP, stablecoins, wrapped Bitcoin, and Ethereum, further increasing XRPL’s functionality.

How High Can XRP Go?

Dewis urged caution about high expectations, noting that XRP’s current $135 billion market cap makes a 1,000% return unrealistic. Even a 10x increase, which would raise its market cap to $1.5 trillion, is a long shot.

However, he identified the 4.236 Fibonacci level at $7.30—roughly a 3x increase—as a plausible target under the right conditions. He added that favorable factors, such as RLUSD approval and a pro-crypto administration, could drive further gains.

• Also Read :
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Trump Administration’s Impact on XRP

Dewis also highlighted recent political developments under President Trump, which could influence XRP’s future:

• David Sacks as AI & Crypto Czar
  Trump appointed venture capitalist David Sacks as the White House AI & Crypto Czar. Sacks, a known Ripple supporter, is expected to promote crypto and AI innovation. Ripple’s CEO Brad Garlinghouse and CLO Stuart Alderoty believe this could boost momentum for XRP and other crypto assets like ZRX.
• XRP’s Election Rally
  XRP has surged 400% since Trump’s election victory, reflecting optimism about his administration’s pro-crypto policies.

The Road Ahead

Despite positive developments, XRP still faces regulatory uncertainty. The SEC’s appeal against Ripple remains a significant hurdle, with an opening brief due by January 15, 2025, before Gary Gensler steps down as SEC Chair.

However, Gensler’s potential replacement, Paul Atkins, may withdraw the appeal immediately, solidifying the July 2024 ruling as a landmark precedent for the U.S. crypto market.

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