XRP Dethrones BNB As Fourth Largest Crypto With 73% Leap; Funding Rates Skyrocket

With a stunning 73% surge in market cap in a single day, XRP, the payment-centric cryptocurrency, has toppled BNB token to claim the title of the world's fourth-largest digital asset.

At the time of writing, XRP commands a market cap of $40.58 billion, vs BNB's market value of $40.21 billion, which itself rose by a modest 5%. The value of XRP surged from 47 cents to almost 94 cents.

The source of this leap in XRP's value can be traced back to Ripple Labs' partial triumph in a drawn-out legal war with the US Securities and Exchange Commission (SEC) over XRP sales.

Ripple's Partial Victory And What It Means

In a recent announcement, the District Court for the Southern District of New York stated that Ripple's offering and selling of XRP on digital asset exchanges did not constitute offers and sales of investment contracts, as the SEC claimed.

However, the Court pointed out that Ripple's direct sale of XRP, totaling over $700 million, to institutions and hedge funds, did violate securities laws. Ripple had been accused by the SEC of selling unregistered securities after selling $1.3 billion worth of XRP in 2020, leading to a mass delisting of XRP by large exchanges and weighing the crypto down while other assets ended the year positively.

The first part of this ruling has opened a pathway for XRP's relisting on centralized exchanges. Coinbase and Crypto.com have already taken action, and Gemini is considering adding XRP for both spot and derivative trading.

XRP Is A Security, Says CoinShares' Head Of Product

However, the second part of the court's verdict has defined XRP as a security, asserts Townsend Lansing, CoinShares’ Head of Product.

"The Court has accused Ripple of securities laws violation, particularly related to direct sales to institutional investors. Consequently, XRP is now viewed as a security, and doubts have emerged about the legality of its offering. The Court confirmed that laws were violated in these sales, giving the SEC a significant victory and setting a precedent for its future actions against other cryptocurrencies," Lansing pointed out in an email.

Additionally, Lansing noted, "Institutional investors who purchased directly from Ripple may find themselves in the line of fire for class-action litigation as potential underwriters. This will be a space to watch, especially if high-profile venture capitalists were involved."

The recent ruling's second part seems yet to deter traders, evidenced by XRP's soaring price and bullish stance in the perpetual futures market.

Data from Coinglass reveals that aggregated volume-weighted perpetual futures funding rates worldwide have hit their highest since at least December, and the open interest-weighted rates are at a four-month peak—indicating a bullish tilt.

Funding rates are recurring payments between bullish and bearish position holders in the perpetual futures market, with a positive rate showing a dominant bullish trend.

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