XRP’s double-digit gains could be the result of a bold bet by retail investors, especially those in Asia, that the cryptocurrency’s price could follow the broader crypto bull run. The latest rally surprised many because it is happening not long after XRP crashed on the news the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple Inc., claiming the company sold the token as a security.
That said, it seems as if some market participants are undeterred by the regulator’s action.
“Traders often trade products on a relative value basis,” Chris Thomas, head of digital assets at Swissquote Bank, told CoinDesk on Jan.7. “XRP felt cheap a few days ago. Today it feels normal again, in my opinion.”
Read More: XRP Climbs Back up Crypto Rankings With Near 50% Rise
Simons Chen, a crypto trader based in Hong Kong, told CoinDesk he bought XRP when the price went to nearly its bottom point at the end of December with the belief that it would rebound soon, following bitcoin’s trend.
Chen said that when bitcoin and other alternative cryptocurrencies (altcoins) were going up, XRPs price went the opposite way because of the SEC news. That movement, to him, meant a great opportunity to “buy the dip.”
Read More: An SEC Victory in Ripple Case Would Render XRP ‘Untradeable,’ Market Pros Say
Trading volumes from major exchanges globally, particularly in Asia, also show significant traffic in the XRP/USDT (tether) and XRP/KRW (Korean won) pairings, according to data from Nomics.
CoinDesk Research collected XRP trading volume data since Dec. 1, 2020, from six exchanges that saw noticeable activity and broke down the data by quote currency. Significant volumes came from the XRP/USDT and XRP/KRW ) pairings, yet volumes on XRP/bitcoin and XRP/ether pairings were relatively small.
Tether, a dollar-pegged stablecoin, is frequently used by traders and investors in Asia, especially in China, to buy cryptocurrencies. Due to regulations in South Korea, people there often buy cryptocurrencies directly from fiat on Korea-based exchanges. The data indicates the markets in Asia have been the main driver of the price rally.
Even though multiple exchanges, especially those that have a presence in the U.S., have announced suspension or delisting of XRP on their platforms, XRP pairings are still available on many other exchanges, including the so-called “Big Three” – Binance, Huobi, and OKEx – all of which first started in China.
“Unlike Coinbase or other ‘regulated’ exchanges, Korean and [other] Asian exchanges do not need to care that much of what the SEC does, and investors in Asia are less sensitive about the news,” said Sinhae Lee, partner at Shanghai-based blockchain consulting firm Block72. “With the current major altcoins’ price appreciation, investors bought XRP as its price went down a lot.”
The lack of institutional investors, particularly those based in the U.S., is evidence that…