What happened
Today's been a very red day in the world of cryptocurrencies. With the entire crypto market declining 3.4% over the past 24 hours as of 1 p.m. ET, investors are clearly on edge. However, for other tokens such as XRP (XRP -0.81%) that have seen recent momentum, today's decline has been more precipitous. As of 1 p.m. ET, XRP has dropped 10.4% over the past 24 hours.
This move comes as investors continue to digest how the ongoing Russia-Ukraine tensions will impact capital flows into risk assets.
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For XRP and its parent company Ripple, ongoing Securities and Exchange Commission (SEC) litigation has provided a significant headwind for this token for some time. It appears the recent ongoing geopolitical environment is one that's overshadowing otherwise bullish takes on this litigation from investors of late.
So what
While many had previously viewed cryptocurrencies such as XRP as low-correlation assets relative to stocks, this view is being challenged by the price action of most tokens right now. The extent to which macro forces are overshadowing token-specific catalysts is perhaps clearest with XRP right now.
That's because recent movement on the SEC litigation against Ripple has been mostly positive. Reports that documents will be unsealed for the public to view, as well as analysis showing that commentary from the judge presiding over the case appears to be in favor of Ripple, support the view that XRP could be due for a significant rebound. In any case, the potential for a resolution to this ongoing litigation in the near term is something that, until this recent war-driven bearish outlook on risk assets, has been viewed positively.
Now what
Perhaps the recent surge in value XRP tokens have seen of late is partly responsible for today's outsized move lower. We've seen volatility work in both directions in the crypto world, and this amplified volatility has been more prevalent of late, to be sure. The higher a specific token goes in a short amount of time, the more room it has to fall, theoretically speaking.
Ripple and XRP appear to remain high-beta bets on movements within the crypto market right now. Accordingly, XRP is a token that many ought to view as one that may continue to see more volatility than its peers for some time. Until this cryptocurrency's price action settles down, those looking for conservative long-term crypto investments may want to seek out other megacap tokens, at least for now.
