Why XRP Is Skyrocketing Today

XRP (CRYPTO: XRP) is posting big gains in Wednesday's trading. The cryptocurrency was up 12.6% over the previous 24 hours of trading as of 11:30 a.m. ET. Meanwhile, Bitcoin was up 3%, and Ethereum was up 4.4%.

XRP is surging today due to the arrival of a key deadline in a legal case brought by the Securities and Exchange Commission (SEC) against Ripple Labs -- the company that created the cryptocurrency. XRP's token price is also getting a boost from the latest Consumer Price Index (CPI) report, which showed that inflation came in lower than expected last month.

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XRP surges as legal case hits key deadline

Today is the deadline for the SEC to file an appeals brief in its suit alleging that Ripple Labs offered XRP tokens as a security in order to attract funding from investors. The case was brought in 2020 and saw an initial judgement in 2023 that fined Ripple $125 million -- far below the $2 billion penalty sought by the SEC.

The SEC chairman is set to step down from his role and will be replaced by Paul Atkins, so some investors are betting that the regulatory agency could decide not to pursue the case further. But even if the appeals brief is filed today, it's possible that the SEC under Atkins will drop the litigation and be broadly more supportive of the crypto industry.

Inflation data is also lifting XRP today

The Bureau of Labor Statistics (BLS) published CPI data for December today, and the numbers are powering big gains for cryptocurrencies and stocks. The report showed core inflation of 3.2% last month, which came in below economists' forecast for inflation of 3.3%.

Thanks to the lower-than-expected CPI inflation, investors are warming back up to cryptocurrencies and speculative assets. Investments in these categories historically see much better performance when interest rates are low, and the latest CPI report increases the chances that the Federal Reserve will continue to cut rates in 2025.

With political and macroeconomic tailwinds at its back, XRP's token price has surged to a new record high today. If these catalysts continue to work in the cryptocurrency's favor, the stage could be set for it to hit new valuation highs.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and XRP. The Motley Fool has a disclosure policy.