XRP rose as much as 8% in the past 24 hours to lead recovery among crypto majors as broader equity markets declined ahead of a key interest rate decision this week.
The rise in XRP came as token issuer Ripple Labs said in a filing to the U.S. Securities and Exchange Commission (SEC) that XRP wasn’t a security subject to the regulator’s authority. Ripple sought dismissal of the SEC lawsuit before trial in federal court in Manhattan, arguing that XRP could not be considered a security because there was no “investment contract” that granted investors the rights to or require the issuer to act in their interests.
In a 2020 suit, the SEC accused Ripple of misleading XRP investors by failing to register the token as a security and not providing adequate disclosure – a claim that Ripple continues to defend.
Bitcoin (BTC), Cardano’s ADA, and ether (ETH) rose over 4%, while meme coins dogecoin (DOGE) and shiba inu (SHIB) increased a nominal 2%. Ethereum classic (ETC) slid 15% as the hype around its revival tapered off, while overall crypto market capitalization added 3.4% after falling Monday to $930 billion for the first time since July.
On Tuesday, the pan-European stock index Stoxx 600 fell 0.59% – reaching levels previously seen in the first week of July. U.S. tech-heavy Nasdaq 100 rose 0.76% in pre-market trading, pointing to gains when the New York session opens. Asian markets rose, with Hong Kong’s Hang Seng closing 1.16% higher amid hopes for reopening its international borders sooner than expected.
That recovery came on the back of a decline in equity markets Monday amid fears among traders expecting outsized higher rate hikes, with the U.S. Federal Reserve expected to again hike rates by 75 basis points today, as per Bloomberg economists.
The hike comes as policymakers escalate their effort to contain inflation – which investors fear would trigger a recession as higher rate hikes eventually lead to higher commodity prices and muted spending power.
Meanwhile, some market observers said the possibility of the Fed hiking rates by an entire percentage point was still in the cards.
“With August inflation figures of 8.3%, the Fed will be even more determined to raise interest rates by up to 100 basis points,” opined Chris Esparza, CEO and founder of Vault Finance, in an email.
“Bitcoin has the highest correlation with the broader stock market, which has been under seller pressure since the inflation data was released,” Esparza added. He pointed out that previous rate hikes have led to an immediate price correction in bitcoin as the asset followed the movement of broader equity markets.