A Twitter account that tracks the XRP liquidity index value across the four ODL corridors shows that three have a zero figure. This issue comes as Ripple Inc. announced that it will face a lawsuit by the Securities and Exchange Commission. It accuses the company of violating investor-protection laws by selling a bitcoin-like digital asset, its native token XRP. To some extent, some may consider this hurdle a cause to the negative liquidity index.
Of the four Ripple ODL corridors, Bitso, Bitstamp, and BTC Markets have an XRP liquidity index that is negative and shows -1 365 925, -6 598803, and -3487 819, respectively. At the time of writing, XRP is down by 10% , trading at 0.4567.
Bitso and Bitstamp are the leading platforms that work with Ripple’s ODL products to make cross-border transactions using XRP as the bridge currency. Bitso is based in Mexico and works with the XRP / MXN partner. Bitstamp is based in Luxembourg and works with XRP / EUR.
The SEC Lawsuit Over XRP Cryptocurrency
The case revolves around whether XRP, a digital asset launched in 2012 by Ripple, is a security to register with the SEC. In recent years, the SEC has ruled that the most valuable cryptocurrencies, Bitcoin and Ethereum, do not qualify as securities. It is because of their decentralization without anyone or company controlling them.
XRP is different from Bitcoin and Ethereum in that the last two currencies overlap in a step-by-step and ongoing process known as mining. In comparison, Larsen and others created 100 billion XRP in 2012 for a company called Ripple Labs.
Ripple has been aggressively rejecting the idea that its coin has been a security for years. The company noted that they did not have the discretion to use reserve funds as desired. XRP is becoming more decentralized as banks and other traders utilize it as a bridge currency in cross-border transactions.
Garlinghouse said he must defend all cryptocurrencies and not let the SEC disrupt the entire industry. He added that they would be on the right side of the story.
Tenitoshi on The Lowering Liquidity
It is not the first time this year, and even before that these index values have turned negative. The index creator is referred to as tenitoshi on the index page. When asked about the significance of the index’s negative value in the past year, he answered that the market volume should not go negative in principle.
It is most likely due to the index value calculation, and the creator recommended considering the negative numbers as near zero. The negative value can be a result of market volatility or no liquidity.
The index started falling below zero after March 13 of this year, also known as Black Thursday. During this time, Bitcoin lost about 50% in 24 hours, and XRP fell to $ 0.13 per coin.
The XRP liquidity negative figures most likely show that the XRP Army is holding onto their coins after XRP hit a high of $0.78257 on November 24. This factor may show future hopes for the coin to surge to new heights, working to their advantage.