XRP has faced a notable downturn after a U.S. district judge rejected a proposed $50 million settlement between Ripple Labs and the Securities and Exchange Commission (SEC), upholding a previously imposed $125 million penalty. This legal decision has introduced fresh regulatory uncertainty, impacting trader sentiment and market behavior.
XRP Price Reaction to Legal Setback
Following the court’s rejection of the reduced settlement offer, XRP’s price declined by 1.3% within a single trading session. The digital asset traded as low as $2.38, reflecting heightened caution among investors.
The ruling reaffirms a $125 million fine against Ripple and includes an injunction against future securities law violations. Although Ripple has expressed its intent to appeal, the market’s immediate response has been negative.
At the time of writing, XRP is trading around $2.35, down approximately 3% since the news emerged. In contrast, major cryptocurrencies like Bitcoin and Ethereum posted modest gains during the same period.
Derivatives Market Reflects Rising Uncertainty
The court’s decision has reverberated beyond spot markets, significantly affecting derivatives trading activity. Market data indicates a sharp pullback in speculative interest, with traders reducing exposure to XRP due to renewed legal ambiguity.
Decline in Open Interest
Within 24 hours of the ruling, open interest in XRP derivatives contracts fell by 6%, equivalent to a withdrawal of over $160 million. This reduction suggests that traders are closing leveraged positions to minimize risk amid ongoing regulatory developments.
Shifting Trader Sentiment
Data from major exchanges like Binance and OKX shows a decline in the long-to-short ratio among top traders. On Binance, the ratio stands at 0.93, indicating that bearish positions are nearly matching bullish ones. The broader account ratio is higher but still reflects weakening optimism.
Liquidations have also tilted heavily toward long positions, accounting for 92% of the $11 million in liquidated derivatives contracts over the past day.
Options Market Activity
While options trading volume saw a slight increase of 4.6%, open interest plummeted by over 59%. This suggests that although there was a short-term spike in activity, larger investors are reducing their exposure to XRP options, signaling caution among institutional participants.
Will XRP Recover in the Near Term?
The extended litigation timeline is expected to sustain volatility and deter new capital inflows. In the short term, XRP will likely continue trading in a consolidation pattern below the $3.00 mark.
Another concern is XRP’s underperformance relative to Bitcoin. On Friday, the XRP/BTC pair declined by 5.3%, suggesting that even in a bullish broader market, XRP may struggle to keep pace with leading cryptocurrencies throughout 2025.
Investors and traders should monitor key support and resistance levels. A sustained rebound above $2.60 could signal renewed bullish momentum and open a path toward $2.80. On the downside, holding the $2.00 support will be critical to prevent further declines.
For those looking to track real-time market movements and analyze trends, you can explore live trading data and charts.
Frequently Asked Questions
Why did the XRP price drop recently?
The price decline followed a U.S. district judge’s rejection of Ripple’s proposed $50 million settlement with the SEC. The court upheld a earlier $125 million penalty, creating renewed regulatory uncertainty.
What does the $160 million drop in open interest indicate?
This reduction signals that traders are closing leveraged positions and reducing risk exposure due to the ongoing legal ambiguity surrounding Ripple’s case with the SEC.
Can XRP price recover soon?
Recovery depends on regulatory developments and technical market factors. If buyers reclaim the $2.60 level, the price could attempt a move toward $2.80.
How is the derivatives market reacting?
The derivatives market has seen increased caution, with falling open interest, a lower long-to-short ratio, and significant liquidations of long positions.
What is the significance of the court’s injunction?
The injunction prohibits Ripple from future violations of securities laws, which may impact its business operations and investor confidence in the medium term.
Should investors be concerned about further declines?
While the $2.00 level remains a key support, the extended legal process may limit upward momentum. Market participants should monitor updates from the courts and regulatory bodies.