Trump's election win fueled crypto XRP's rally to a new high. Here's ...

11 hours ago

Morningstar.com

By Frances Yue

XRP, the world's third-largest cryptocurrency by market capitalization, hit a record high at $2.90 on Tuesday before pulling back - with its recent rally fueled by optimism around a potentially more friendly regulatory environment under the upcoming Trump administration.

The cryptocurrency (XRPUSD), linked to Ripple Labs and designed for international payments, traded at around $2.50 on Tuesday afternoon at last check, down 6.2% on the day but up 311% year to date, according to Dow Jones Market Data. Its performance this year was relatively muted before it rose more than 400% after Donald Trump won the U.S. presidential election on Nov. 5.

XRP has been the fourth-best-performing crypto among the top 100 tokens by market capitalization over the past seven days with a 85.6% gain, significantly outperforming bitcoin (BTCUSD) and ether (ETHUSD), according to data from CoinMarketCap. Bitcoin was up 3.4% during the past seven days, while ether rose 8.8%.

Investors are hoping that a change in the leadership at the Securities and Exchange Commission may lead the agency to eventually drop its lawsuit against Ripple, Alex Kuptsikevich, chief market analyst at FxPro, wrote in a Tuesday note. In October, the SEC appealed a court decision that ruled programmatic sales of Ripple's XRP token to retail investors did not violate securities laws.

SEC chair Gary Gensler, who's generally perceived as unfriendly to the crypto industry, said last month that he would leave his post on Jan. 20 as Trump is inaugurated.

Meanwhile, crypto bulls are hopeful that the SEC under Trump may approve more exchange-traded funds investing in smaller cryptos like XRP, Kuptsikevich noted. U.S. regulators have so far only approved ETFs that invest in bitcoin and ether.

A number of asset managers, including Bitwise, 21Shares, Canary Capital and WisdomTree, have filed applications for spot XRP ETFs.

Along with its price rise, XRP's 60-day realized volatility went up over 100% for the first time since July 2023 shortly after Trump won the election, according to data from crypto research firm Kaiko.

XRP also saw a sharp increase in its trading volume recently, according to data from Kaiko. During last weekend, XRP's trading volume even surpassed that of bitcoin, based on Kaiko's data.

"Seeing stronger volumes accompany a move higher in prices implies that the move has a broad base and is less likely to be just a fleeting change," Kaiko analysts wrote.

-Frances Yue

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12-03-24 1626ET