After reaching a new 52-week high in July, XRP (CRYPTO: XRP) is currently struggling to maintain its growth momentum. Over the past 30 days, XRP has dropped by up to 20%, a concerning figure compared to other top cryptocurrencies. During the same period, Ethereum (CRYPTO: ETH) increased by 10%, while Bitcoin (CRYPTO: BTC) and Solana (CRYPTO: SOL) only saw slight declines of 5% and 7%, respectively. Clearly, XRP is becoming the 'dark spot' in the overall landscape of the crypto market.

Main Reason: The Ghost of Regulatory Uncertainty Returns

One of the biggest reasons XRP has weakened is the unexpected return of legal issues. In early August, it seemed that all legal disputes with the U.S. Securities and Exchange Commission (SEC) had ended after Ripple, the issuer of XRP, reached a settlement in a lawsuit that had been ongoing since late 2020. This news was initially expected to give a significant boost to XRP's price. However, the opposite occurred: XRP not only failed to rise but also became one of the poorest-performing currencies in the market.

The more concerning issue is that the legal environment in the U.S. seems to be unfavorable for Ripple. The decision on the exchange-traded funds (ETFs) for spot XRP, which was expected to be approved this month, has been postponed by the SEC until mid-October. Additionally, Ripple has expressed concerns that the new bill on the market structure for digital assets soon to be passed by the U.S. Congress could negatively impact the company's business.

Important projects such as applying for banking licenses in the U.S. or deploying real-world asset tokenization solutions are also at risk of delays without clarity from the legal framework.

Should We Be Concerned About XRP?

The key issue that investors need to monitor is the likelihood of the SEC approving spot XRP ETFs. Previously, analysts – including Bloomberg – had predicted an almost certain (95%) probability of approval this year. However, data from recent online prediction markets, such as Polymarket, shows that this probability has dropped to around 78%. Although still a high number, this downward trend somewhat reflects the investors' concerns.

The price of XRP also struggles to approach significant milestones. Both times XRP came close to the $4 mark this year were hindered by negative events. In January, XRP reached $3.40 before plummeting due to news of new tariffs. By July, when it hit $3.65 – the 52-week high – the market received news that a senior Ripple executive sold $175 million of XRP, extinguishing the upward momentum.

Upcoming Prospects

If I had to point out the biggest reason XRP is falling behind, it is the ongoing legal uncertainty surrounding Ripple. This is quite ironic considering that the historic lawsuit from 2020 seemed to be closing.

Predictions in the near future suggest a high likelihood that spot XRP ETFs will be approved by the end of this year. At that point, the price drop in August may only be a 'temporary storm.' However, from now until then, XRP is likely to remain highly volatile. Investors need to exercise caution, closely monitor legal developments, and prepare psychologically for the next 'big waves.'