How have the crypto markets reacted?

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On July 13, 2023, the cryptocurrency industry received good news when Judge Analisa Torres of the United States District Court for the Southern District of New York ruled that Ripple did not violate securities laws by selling its token (XRP) through public exchanges. The move runs counter to assertions made by the SEC in both this lawsuit and others against crypto industry giants like Coinbase and Binance that most cryptocurrencies should be regulated in as securities such as stocks and bonds. Although the judge concluded that Ripple violated securities law when it sold XRP to institutional investors, the decision gave the industry hope that other cryptocurrencies considered securities by the SEC in other cases could see similar rulings and be allowed to continue trading as normal on exchanges, without the risk of violations of securities laws by token issuers or the exchanges themselves. But given the number of other court cases pending, as well as congressional momentum on crypto legislation, there is still a lot to sort out.

Even so, this decision made waves in the crypto world. How did the market react? Well break it down below.

Market Reaction: Big Moves for Ripple and Other Tokens Previously Considered Securities

First, we have seen a strong increase in the price of Ripples and the overall trading volume. Ripples XRP price jumped 87% yesterday on news of its legal victory, hitting a one-year high of $0.88. As of 1 p.m. on July 14, its price sits at $0.72.

We can also see that XRP inflows and outflows from centralized exchanges increased just before and during the price spike, as many users apparently sought to trade on the good news.

XRP is not the only token affected by yesterday’s decision, however. The SEC had previously named several other tokens as securities in separate lawsuits under a framework similar to Ripple’s designation. Many of these tokens have also seen significant price increases, with users likely convinced that the Ripple affair bodes well for their own health and legality. Check out the chart below, which compares the 24-hour price performance since just before the Ripple decision announcement for several non-stablecoins previously considered securities by the SEC against a select group of previously not considered tokens. as such.

Other than Bitcoin Cash, all of the tokens we review showed at least modest gains, but those gains were significantly larger for coins that have already come under SEC scrutiny and been designated as securities in lawsuits filed by the regulatory agency. As with XRP, many (but not all) of these tokens have also seen strong increases in trading volume.

The outflow data suggests that, as with XRP, interest has grown in trading assets whose designation by the SEC as securities is now in question.

Finally, yesterday’s decision also appears to have triggered a surge in DEX activity. Check out the chart below, which shows the total DEX trading volume per token in the hours before and after the Ripple decision.

In the hours following the Ripple decision, DEX traders increased their activity significantly, with most of the additional volume driven by wETH and stablecoins.

The market thinks big things are coming after the Ripple decision

It remains to be seen whether the Ripple decision will stand and how other tokens will be valued by regulators in the future. But the data we show above indicates that crypto users believe the Ripple decision is positive for the industry, as almost all tokens are up and trading volume has increased. Continue to monitor and provide updates when possible, and look forward to working with our industry and government partners to consider what US cryptocurrency regulation might look like.

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