Why XRP Ripped Higher on Friday

What happened

The value of cryptocurrency XRP (CRYPTO: XRP) jumped 20.4% from its low late on Thursday to a peak early Friday. The token's value is flat on the day as of 3 p.m. ET, but it still up about 30% in the past week.

So what

On Thursday afternoon, Brad Garlinghouse, the CEO of Ripple Labs,the creator of XRP, said on Fox Business that "the SEC has kind of lost its way ... Congress gives the SEC power. The SEC can't just take power." This comes as the SEC and Ripple both asked the court for a quick ruling on SEC charges of selling unregistered securities against the company.

Investors are simply speculating that the court will rule in favor of Ripple, which could increase the price of the token. While the positive ruling is possible, I'm not sure it will drive XRP significantly higher. The token is already one of the most valuable in cryptocurrency with a $23 billion market cap, and that may not hold when speculators begin selling.

Now what

Ripple continues to build infrastructure for banking on the blockchain, but the token itself is being traded more like a speculative asset. Right now, the speculation is on what U.S. courts and the SEC are doing. While the ruling could be impactful for Ripple as a company and the cryptocurrency community more broadly, I don't think a positive ruling will inevitably add value to the token. That will be done by building the ecosystem, which is a much longer-term project than a court battle.

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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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