Why XRP (Ripple) Is Dropping Today

Crypto token XRP (CRYPTO: XRP) is falling on Wednesday. The price had fallen 5.3% in the last 24 hours as of 11:20 a.m. ET. The move comes as the S&P 500 lost 1.2% and the Nasdaq Composite lost 1.6%.

Crypto investors were disappointed to learn that the Securities and Exchange Commission (SEC) is delaying a key regulatory decision that would allow for the creation of an XRP exchange-traded fund (ETF).

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The SEC is kicking the can down the road

The SEC revealed yesterday that it is delaying until mid-June its decision on Cboe BZX Exchange's request to list and trade shares of the Franklin XRP Fund. The decision deadline was May 3, but the SEC said it "finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein."

According to coindesk.com, James Seyffart, a Bloomberg Intelligence analyst, is doubtful a decision will come in June, saying he believes the decision won't come until October at the earliest.

An ETF could be a major catalyst

An XRP ETF would vastly expand XRP's reach, especially with institutional investors, and be a key driver of growth. The release of Bitcoin ETFs in early 2024 helped propel a new bull run for the whole market. While the delay wasn't entirely unexpected, it does cast some doubt as to whether the SEC will eventually approve ETFs for XRP.

Regardless of the eventual outcome, I believe that XRP is currently overvalued and I would caution investors from getting caught up in the hype.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and XRP. The Motley Fool has a disclosure policy.