Why is XRP Price Down Today?

NOIDA (CoinChapter.com) — XRP has faced sharp downward pressure, with its price plummeting to $0.53, marking a significant decline of over 16% since Oct. 2. A recent update in the SEC Ripple lawsuit is likely why XRP price is down today.

Once riding high after court victories in its battle with the U.S. Securities and Exchange Commission (SEC), the Ripple token’s price action took a turn for the worse as it entered Oct. 2024.

XRP price is down, ignoring any positive sentiment from institutional interest or potential exchange-traded fund (ETF) filings.

SEC Appeal in Ripple Lawsuit Kills Bullish Cues From ETF Filing

XRP bulls had their hopes lifted earlier this week when Bitwise Asset Management filed for an XRP ETF on Sept. 30. Following the success of Bitcoin and Ethereum ETFs, XRP bulls had hoped an investment vehicle to attract billions of investor dollars.

However, the bullish anticipation was short-lived as the SEC Ripple Lawsuit took another sharp turn.

On Oct. 2, the SEC filed a notice of appeal against Judge Analisa Torres’ ruling, which previously cleared Ripple’s XRP secondary sales on retail exchanges from violating securities regulations.

The timing of the SEC’s appeal crushed any XRP ETF-fueled bullish momentum. Investors who hoped XRP would capitalize on the ETF trend were disappointed. The SEC Ripple case now adds more uncertainty to XRP’s regulatory status, reinforcing the fear that XRP could be reclassified as a security.

Such a designation would place additional regulatory burdens on the token, the speculation of which increased the selling pressure against XRP. The SEC Ripple lawsuit began four years ago after the agency accused the company of selling $1.3 billion in unregistered securities and continues to weigh heavily on XRP’s price action.

XRP’s price drop seems to have been triggered more by the SEC’s aggressive pushback than by any potential ETF-driven rally. The combination of legal uncertainty and regulatory scrutiny remains a bearish overhang, pulling the price down as investors grow more cautious.

Futures Market Highlights Bearish Pressure Against XRP

Beyond the regulatory backdrop, on-chain metrics provide additional bearish signals for XRP. The funding rate for XRP flipped into the negative on Oct. 2, signaling that traders are predominantly shorting the token.

A negative funding rate typically indicates that the market expects prices to fall further, as bears are willing to pay to keep their short positions open. Although the funding rate briefly turned positive on Oct. 3, it’s not enough to offset the overwhelming bearish sentiment surrounding XRP.

Another key indicator, open interest, has declined since Oct. 1. This suggests that traders are closing their positions rather than opening new ones. The shrinking OI amid falling prices signals weakening market confidence.

Without a fresh influx of demand or renewed positive sentiment, the declining OI level paints a grim picture for XRP’s immediate future. Both metrics—the funding rate and OI—suggest traders expect further downside, reinforcing the bearish outlook on XRP price action.