Ripple’s XRP token has faced renewed downward pressure following a significant legal development in its long-running battle with the U.S. Securities and Exchange Commission (SEC). After U.S. District Judge Analisa Torres rejected a proposed $50 million settlement between Ripple Labs and the SEC, XRP price dropped 1.3% within 24 hours, falling as low as $2.38. The ruling effectively upholds a previous $125 million penalty and extends regulatory uncertainty—triggering a wave of caution across both spot and derivatives markets.
With over $160 million withdrawn from XRP derivatives positions and growing skepticism among institutional traders, investors are questioning whether XRP can maintain its current support levels or if further declines lie ahead.
XRP Holds Above $2 Support Despite Legal Headwinds
Despite the negative court ruling, XRP has managed to stabilize above the critical $2 psychological support level, currently trading around $2.35 according to Coingecko data. However, this resilience masks deeper concerns among traders who had hoped for a quicker resolution to the multi-year regulatory dispute.
The rejection of the $50 million settlement deal by Judge Torres not only increases Ripple’s financial liability but also prolongs the legal ambiguity surrounding XRP’s classification as a security. This uncertainty has historically been a key factor influencing investor confidence and capital inflows into the asset.
While Bitcoin and Ethereum have shown signs of recovery—trading near $104,400 and $2,590 respectively—XRP continues to underperform relative to other top-tier digital assets. The lack of positive momentum suggests that traders remain risk-averse until there is clearer regulatory clarity.
Derivatives Market Signals Widespread De-Risking
The impact of the court decision has been most evident in the derivatives market, where trader behavior reflects a rapid shift toward risk mitigation.
Data from Coinglass reveals a 6% drop in open interest across major exchanges within 24 hours—equating to over $160 million in capital withdrawal. This sharp decline indicates that leveraged traders are closing positions to avoid potential volatility spikes linked to ongoing litigation.
Furthermore, liquidation data shows that more than $11 million in XRP positions were wiped out, with 92% of those being long positions. This imbalance underscores weak bullish conviction and highlights how quickly sentiment can turn when regulatory risks resurface.
Exchange-specific metrics reinforce this trend:
- Binance reports a long-to-short ratio of 0.93, signaling near parity between buyers and sellers.
- The broader account-based ratio sits at approximately 3.02, suggesting retail participation remains skewed slightly bullish—but not aggressively so.
Options Market Reflects Loss of Investor Confidence
Beyond futures markets, options data paints an equally cautious picture. While daily options volume increased slightly by 4.6% to $4.38K, **open interest plummeted by over 59%**, dropping to just $516.63K.
This divergence—rising volume alongside collapsing open interest—typically signals short-term speculative activity rather than sustained institutional commitment. Large investors, who often dominate options trading, appear to be pulling back, possibly reallocating capital to less legally exposed assets.
Such outflows suggest that even if broader crypto markets continue rallying through 2025, XRP may struggle to keep pace without a favorable resolution to its SEC case.
Can XRP Recover in 2025?
Looking ahead, the path to recovery for XRP hinges on two primary factors: regulatory resolution and technical price action.
Given that Ripple intends to appeal the court’s decision, the legal process could extend well into 2025, prolonging market indecision. In such an environment, XRP is likely to remain range-bound between $2.00 and $3.00 unless a breakout catalyst emerges.
From a technical standpoint:
- A sustained move above **$2.60** could rekindle bullish momentum and open the door toward $2.80.
- Conversely, failure to hold above **$2.30** may trigger another leg down toward $2.00 or even $1.85, especially if whale selling intensifies.
Additionally, XRP’s underperformance against Bitcoin—evidenced by a 5.3% lag in the XRP/BTC pair—raises concerns about its ability to capture market share during broader uptrends.
Frequently Asked Questions (FAQs)
Why did XRP price drop recently?
The decline followed a federal judge’s rejection of a proposed $50 million settlement between Ripple and the SEC, maintaining legal uncertainty around XRP’s status and Ripple’s future compliance obligations.
What does the $160 million drop in open interest mean for XRP?
It reflects widespread de-risking by traders in response to renewed legal ambiguity. Such capital outflows typically precede periods of low volatility or further downside pressure.
Is XRP likely to rebound in 2025?
A recovery is possible if Ripple achieves a favorable legal outcome or if technical indicators show strong buying pressure above key resistance levels like $2.60. However, prolonged litigation could delay any meaningful rally.
Could XRP fall below $2?
Yes. If bearish momentum accelerates and support at $2.30 breaks, downside targets could extend to $1.85—particularly if large holders increase selling activity.
How does XRP compare to other major cryptocurrencies right now?
XRP is underperforming peers like Bitcoin and Ethereum, which have regained key price levels. Its correlation with regulatory news makes it more volatile and less attractive during uncertain phases.
What should investors watch for next?
Key indicators include Ripple’s appeal progress, changes in open interest and liquidation trends, whale wallet movements, and shifts in the long/short ratio on major exchanges.
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Final Outlook: Caution Prevails Amid Legal Limbo
As Ripple prepares for the next phase of its legal battle with the SEC, the immediate outlook for XRP remains cautious. The combination of increased penalties, prolonged litigation, and weakening trader sentiment has created a challenging environment for price appreciation.
While the $2 support level holds—for now—the absence of strong bullish catalysts suggests that sideways consolidation or further downside may be more likely in the near term. Investors should closely monitor legal developments, derivatives flows, and on-chain metrics to gauge shifts in market psychology.
Ultimately, XRP’s long-term potential remains tied to regulatory clarity. Until then, prudent risk management and strategic positioning will be essential for navigating its volatile trajectory.
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