5 Reasons Why XRP Is Struggling Despite Trump’s Pro-Crypto Pick for U.S. SEC Chair
2024-12-05

5 December 2024, will go down as a historic day in cryptocurrency. At approximately 2:33 a.m. UTC, Bitcoin BTCUSDT surged past the $100,000 milestone for the first time in history. 
This massive breakout came less than 10 hours after Donald Trump announced Paul Atkins, a pro-crypto former SEC commissioner, as his nominee for the next SEC Chair. Ethereum ETHUSDT also climbed 5.4%, with excitement spreading across the market.
But XRP, which recently had an incredible November, has not joined the party. Instead, it’s down 9.3% in the past 24 hours, making it the worst-performing cryptocurrency among the top 10. 
This surprising divergence has left XRP investors wondering: Why is XRP struggling while Bitcoin and Ethereum rally?
Here are five key reasons that explain today’s puzzling price action.
Bitcoin’s Historic $100K Breakout Has Shifted Market Focus
As mentioned earlier, at around 2:33 a.m. UTC on 4 December 2024, Bitcoin surged past the psychological $100,000 barrier for the first time. This historic milestone came on the back of optimism surrounding Trump’s nomination of Paul Atkins as the next SEC Chair. Traders viewed this as a signal of potential regulatory clarity for crypto, leading to significant inflows into Bitcoin and Ethereum.
Bitcoin’s trading volume surged 108.84% in the past 24 hours, while Ethereum’s rose 63.30%. XRP’s volume, on the other hand, dropped 34.5%, showing reduced activity as traders reallocated funds toward Bitcoin and Ethereum. This focus on Bitcoin and Ethereum has left some altcoins like XRP sidelined, at least temporarily.
Long Liquidations Amplified XRP’s Price Drop
XRP faced a significant wave of liquidations over the past 24 hours. According to CoinGlass, $55.92 million in XRP positions were liquidated, with $39.45 million coming from long positions.
This suggests that many traders were heavily leveraged, betting on XRP to continue its November rally. However, as XRP’s price began to dip, these leveraged positions were automatically closed, creating a snowball effect that pushed the price down further.
Compared to Bitcoin and Ethereum, which saw strong inflows, XRP’s reduced trading volume made it more susceptible to these liquidation events.
Profit-Taking After XRP’s Massive November Rally
In November, XRP gained 65.6%, driven by optimism around Ripple’s expanding partnerships and its use in cross-border payments. This impressive rally set the stage for profit-taking, especially as XRP approached highs near $2.80 earlier this week.
XRP’s open interest dropped 4.25% in the past 24 hours, indicating that traders are closing positions rather than building new ones. The reduced trading volume (down 34.5%) also suggests that some investors are stepping back after locking in profits. This kind of profit-taking is common after strong rallies and often leads to short-term corrections like the one we’re seeing today.
Ripple’s Legal Battle Casts a Shadow Over XRP
Trump’s nomination of Paul Atkins, a pro-crypto SEC Chair candidate, sparked optimism across the market. However, some XRP investors might be staying cautious due to Ripple’s ongoing legal battle with the SEC.
Even with a crypto-friendly SEC Chair, there’s no guarantee that the case will be resolved quickly. 
On 2 October 2024, the SEC escalated the dispute by filing an appeal against key aspects of Judge Torres’ July 2023 decision. This move targets specific areas of contention, namely the classification of XRP sales on digital platforms and how Ripple distributed tokens to its employees. Notably, the SEC isn’t challenging the court’s stance on XRP’s overall status as a non-security.
Looking ahead, the case is set to unfold over an extended timeline. The SEC must submit its opening arguments by January 15, 2025, kicking off a series of legal exchanges expected to last through mid-2025. The appellate court is likely to hear oral arguments in autumn 2025, with a final verdict anticipated in early 2026.At the heart of this appeal, the SEC is pushing to reverse the court’s findings on particular XRP transactions. Simultaneously, Ripple is fighting to lower the $125 million penalty levied in August 2024. 
Negative Sentiment in Derivatives Markets
Bearish sentiment in XRP’s derivatives markets is another factor driving today’s drop. According to CoinGlass, XRP’s funding rate is -0.0885%, meaning short sellers are paying long traders. This indicates strong demand for short positions and reflects broader pessimism about XRP’s short-term prospects.
Additionally, XRP’s open interest in derivatives dropped 4.25%, showing a lack of confidence among traders. This bearish sentiment aligns with the liquidation data, reinforcing the downward pressure on XRP.