XRP futures contract settlements skyrocketed at the end of the year as signs of a rise in November, followed by decidedly bearish news in December, brought the token price down.
More than $ 1.5 billion in XRP futures contracts have been settled since the beginning of November, according to data from analytics provider Bybt. Nearly $ 700 million in liquidated futures contracts were recorded between March and October.
In November, the price of XRP skyrocketed by more than 220%, for a two-year high, just under $ 0.80, as traders anticipated a symbolic air launch event by the Flare Network for all XRP holders. In short, anyone with XRP would automatically receive a share of the new Spark token, encouraging new buyers to accumulate XRP.
Adding fuel to the frenzy, the main US-based cryptocurrency exchange, Coinbase, announced its plans to support the next air launch, according to the previous CoinDesk report.
“XRP experienced large price movements in November due to retail investor interest in the Spark air launch scheduled for December 12, 2020,” said Florent Moulin, cryptocurrency researcher at data provider Messari. “The market also saw experienced investors accumulating XRP in anticipation of a bullish market led by retail.”
The XRP’s sharp uptrend ended quickly when the United States Securities and Exchange Commission (SEC) filed a lawsuit against Ripple for allegedly violating federal securities laws by selling cryptocurrency to $ 1 retail consumers, 3 billion over a seven-year period.
Traders reacted negatively to the news, as XRP instantly started to return large portions of its earnings from the previous month. Institutional investors followed suit with Bitwise cryptocurrency money manager liquidating the entire XRP position of its index and prominent brokers such as OSL notifying customers that they interrupted all XRP negotiations.
Both events – the air launch and the process – took XRP price volatility to its highest level since July 2018, according to Coin Metrics data, with a more than 130% increase in volatility from the start from November.
The sharp drop in the price of XRP is likely due to a combination of factors, Moulin told CoinDesk. But most significant is probably the SEC’s lawsuit against Ripple.
Also noteworthy is the increase in sales by Ripple co-founder Jed McCaleb, who sold more than $ 120 million in XRP in December, said Moulin, three times more than in previous months.
Part of the December price drop movement was also caused by XRP holders selling after receiving tokens from the air launch event, Moulin said.
Regardless of the reason, since news of the SEC lawsuit was released, the XRP has dropped by more than 60% and fell below its pre-launch frenzy levels in early November, reaching $ 0.21 on Wednesday.
And with the price still falling and more than $ 350 million in futures contracts settled two days before Christmas Eve, XRP investors face a less than happy holiday season.