- Ripple (XRP-USD) has been embroiled in a lawsuit with the U.S. Securities and Exchange Commission (SEC) since late 2020
- A court date later this week could provide a big catalyst for investors
- The XRP token has remained highly volatile in recent days for these reasons, as well as general volatility in the crypto sector
It’s been a rather bumpy ride lately for the world’s sixth-largest cryptocurrency by market capitalization, Ripple (XRP-USD). Indeed, the crypto has fluctuated wildly over the past week, surging to more than 53 cents and below 35 cents.
Much of this volatility has to do with the ongoing lawsuit between the SEC and XRP’s parent company Ripple. Ripple executives have been part of an investigation regarding alleged unregistered securities offerings. This lawsuit goes all the way back to 2020.
However, as the saga continues on and more proceedings take place, investors are rightly pricing more uncertainty into this token’s valuation. Last week, investors in the XRP crypto saw a bout of downside selling pressure brought on by Friday’s testimony from Ripple regarding documents from former SEC official William Hinman. The SEC is alleging these documents are protected by attorney-client privilege.
This brings us to May 18. This is the upcoming date for the SEC to respond to Ripple’s comments on this matter. Much of the SEC’s case against Ripple is dependent upon these communications, which have been cause for much speculation among investors.
Let’s dive into why this could be a big deal moving forward.
Why May 18 Is an Important Date for XRP Crypto
Ripple’s ongoing lawsuit with the SEC is just one of many factors XRP investors are considering right now. Indeed, massive price volatility stemming from market-moving events is top of mind for most investors.
A range of macro factors that drove higher-risk assets higher are now reverting. Less cheap capital means less play money for speculators. For this sector, that’s a waning tide that’s bringing all boats lower.
Given the size of XRP, which has a current market cap of more than $20 billion, the swings we saw this week represent billions of dollars of market capitalization being added or subtracted on a nearly daily basis. Interestingly, XRP is only one of a number of cryptocurrencies that has seen outsized volatility of late.
With that said, until this ongoing lawsuit concludes, I anticipate more volatility on the horizon. Accordingly, XRP is not a token that fits my risk profile right now.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.