In a week dominated by Bitcoin (BTC) and Ethereum (ETH), the cryptocurrency market witnessed an unexpected shift as Ripple Labs' XRP token surged to the forefront. A favorable ruling from the U.S. District Court for the Southern District of New York provided the catalyst for XRP's remarkable performance, pushing it into the center stage of the crypto conversation.
The court ruled that the sale of XRP tokens on exchanges and through algorithms does not constitute investment contracts. This decision had a profound impact on XRP's value, causing it to soar by a staggering 73% immediately after the announcement. It marks the second largest daily increase in the history of XRP, only surpassed by an 83% surge on December 14, 2017.
XRP's remarkable upward trajectory overshadowed the relatively modest performance of Bitcoin and Ethereum, which recorded -0.33% and 2.7% respectively for the week. This surge propelled XRP's market capitalization to $41 billion, pushing it ahead of BNB to claim the fourth position among the largest cryptocurrencies. While XRP still has a long way to go to reach its all-time high of $3.38, the court ruling effectively represents a re-pricing of the asset.
Notably, XRP's relative strength index (RSI) reached levels typically considered overbought, shooting up to 88 before settling around 80. An asset is generally considered overbought when its RSI surpasses 70.
XRP's RSI reading of 88 currently ranks as the 10th highest in the history of the asset. On the 11 previous occasions when XRP's daily reading ranged between 79 and 81, the asset experienced a 29.5% gain in the following 30 days. Investors now face the question of whether XRP's RSI will decline further or if this ruling marks the beginning of a sustained upward movement for the token.
On Friday, XRP prices retraced by approximately 15%, aligning with the overall decrease in cryptocurrency prices. Bitcoin and Ethereum also experienced declines of 4.2% and 4.6% respectively.
The strength of XRP's performance was also reflected in the CoinDesk Market Index (CMI), which saw a rise of 6.8% during the week. Out of the 186 CMI assets, an impressive 172 finished the week in positive territory. While XRP was the clear leader, Stellar Lumens (XLM) emerged as the second-best performer in the CMI, with a 48.6% increase. XLM's performance often mirrors that of XRP due to their historical correlation.
Among the five CMI sectors, DeFi stood out, experiencing an 11.4% rise. The top three DeFi performers were LQTY (41.9%), COMP (28.8%), and SNX (28.7%).
Ironically, the currency sector, to which XRP and XLM belong, lagged behind, with Bitcoin (2.9%) and Bitcoin Cash (-3.8%) dragging down the sector's overall performance.
As the cryptocurrency market continues to evolve, XRP's recent surge serves as a reminder of the potential for unexpected developments and the importance of staying attentive to the broader market landscape.
