XRP Extends Losing Streak to Six Sessions

On Monday, August 5, XRP tumbled 6.44%. Following a 5.78% slide on Sunday, August 4, XRP ended the session at $0.4897. Significantly, XRP extended its losing streak to six sessions as the broader crypto market slid by 7.15% to a total market cap of $1.868 trillion.

The Bank of Japan and the Yen Carry Trade

XRP and the broader crypto market continued to feel the effects of the Bank of Japan’s rate hike and reduction in Japanese Government Bond (JGB) purchases.

A tighter monetary policy and a more hawkish BoJ rate path strengthened the Yen, forcing investors to unwind Yen carry trades. Investors likely borrowed Yen to purchase XRP and other cryptos.

The BoJ’s policy move coincided with fears of a US recession and expectations of multiple 2024 Fed rate cuts, weakening the US dollar. Investors borrowing Yen to purchase US dollars and acquire XRP may have suffered significant losses in unwinding their carry trades.

The market turmoil overshadowed investor hopes of an SEC vs. Ripple settlement.

Expert Views on the Market Turmoil

Steve Sosnick, Chief Strategist at Interactive Brokers, remarked on the carry trade unwind, stating,

“And now the risk-off, unwinding carry trade has come for Bitcoin and crypto.”

SEC Closed Meeting Looms

As the crypto market steadies, following upbeat US ISM Services PMI numbers, investors will likely redirect their attention to the SEC vs. Ripple case.

Recent SEC meeting scheduling has fueled XRP price volatility and hopes of a settlement. The SEC will hold a Closed Meeting on Thursday, August 8, which could be crucial for XRP and the crypto market.

A settlement would end SEC plans to appeal the Programmatic Sales of XRP ruling and set the Programmatic Sales ruling as a legal precedent. In July 2023, Judge Torres ruled that programmatic sales of XRP do not satisfy the third prong of the Howey Test.

XRP rallied to a high of $0.9327 in July 2023 following the Programmatic Sales ruling, before sliding to a low of $0.4367 in August 2023. Fears that the SEC could overturn the Programmatic Sales ruling on appeal impacted XRP demand.

The recent SEC vs. Binance court ruling highlighted the significance of the Programmatic Sales ruling.

SEC vs. Binance Ruling Cites Programmatic Sales Ruling

In June, Judge Amy Berman Jackson dismissed the SEC charges against Binance, claiming that secondary Binance Coin (BNB) sales qualify as securities under the Howey test.

Significantly, Judge Jackson cited the Programmatic Sales of XRP ruling, surmising,

“The court is inclined to agree with the approach of the court in Ripple Labs, since the ‘it-is-what-it-is’ approach of the SEC appears to be inconsistent with the clear Supreme Court directives […].”

A settlement in the Ripple case could end the SEC’s claims that crypto sales on exchanges violate US securities laws.

Investors should remain alert. Stay updated with our latest news and analysis to manage exposures to XRP and the broader crypto market.