Despite its conflict with the US SEC, XRP found itself increasing by over 45% on a weekly basis. Analysts believe that the XRP surge was caused by Asian traders, in fear of missing out (FOMO).
Ripple coin, XRP, recently started seeing a major price surge. The coin increased by over 45% on a weekly basis, even managing to overtake the fourth spot on the list of top cryptocurrencies by market cap from Litecoin (LTC). Interestingly, all of this was possible despite the US SEC lawsuit which knocked the coin’s price by 70% in late December 2020.
There might be a simple explanation for this behavior, as some have suggested that Asian retail traders are responsible for this trend.
Asian traders ‘buying the dip’
FOMO, or the Fear Of Missing Out, has always been a strong drive for investors to buy even the coins that are obviously failing and what is happening to XRP is a perfect example. Asian traders seem to be rushing to buy the coin, even though the SEC has confirmed that it views Ripple’s coin as a security.
Swissquote Bank’s head of digital assets, Chris Thomas, commented on this by mentioning that traders often trade products on a relative value basis. In other words, when XRP price dropped due to the SEC lawsuit, the traders found it cheap, and worth buying, believing that it will eventually return to normal.
In doing so, they likely caused the XRP rally that truly did return it to normal, or at least, it helped it start the journey back up.
Korean and Chinese traders are the biggest XRP buyers
In essence, Asian traders have seen the entire crypto industry heading up, while XRP going in the other direction. To them, that meant that the coin will follow finally, and that buying it while it’s at the bottom is a perfect opportunity.
This seems to have been a popular thought, as numerous major exchanges in Asia faced massive amounts of XRP traffic. The most common pairs were XRP/USDT and XRP/KRW. However, XRP’s pairs against BTC and ETH faced surprisingly small volumes.
The use of KRW shows that many in Korea are rushing to buy XRP, while the use of USDT — a stablecoin frequently used in China, suggests that this country’s users are also XRP believers.
In the West, however, XRP still finds itself in an unfavorable condition, with leading exchanges about to delist it due to the SEC lawsuit.