XRP and XLM Conspiracy Theories Roil Crypto as ‘Ethgate’ Claims Resurface

If you thought crypto drama peaked in 2021, welcome to 2026, where conspiracy theories are now a full-blown market factor. The latest plot twist: old allegations that US regulators played favorites with Ethereum are back in the spotlight, and this time the collateral damage is spreading to XRP and XLM. Traders are suddenly forced to care about Epstein documents, SEC politics, and the possibility that the next regulatory shoe to drop could hit their portfolio square in the PnL.

The news cycle is a fever dream. DailyCoin is reporting that newly surfaced Epstein docs “breathe fresh life into old ‘Ethgate’ allegations that U.S. regulators favored Ether while targeting rivals like XRP.” (DailyCoin, 2026-02-03). The crypto market, already reeling from a fresh wave of selling, is now awash in speculation about what the next enforcement action could look like. Prices are reflecting the paranoia: XRP and XLM have seen outsized volatility, with XRP down sharply from last week’s highs and XLM following suit. Meanwhile, Ethereum is holding up better, but the spread between ETH and its rivals is widening as traders price in regulatory tail risk.

Timeline? The Ethgate narrative first surfaced in 2018, when conspiracy theorists (and a few legitimate lawyers) argued that the SEC’s approach to Ethereum was suspiciously lenient compared to its crackdown on Ripple. The story faded, only to be resurrected every time a new batch of documents or rumors hit the tape. This time, the catalyst is a set of Epstein-related documents that allegedly show backchannel communications between regulators and industry insiders. The market, always eager for a good story, has latched on. XRP is trading like a meme stock, with 24-hour volume up 37% and open interest in perpetuals spiking. XLM, usually the sleepy cousin, is tagging along for the ride. Meanwhile, Ethereum is quietly outperforming, as traders bet that the regulatory overhang will hit its competitors harder.

Context is everything. The crypto market is still licking its wounds after a broad selloff that saw Bitcoin drop 38% from its all-time high and Ethereum rejected at $3,000 (Coinpedia, 2026-02-03). Altcoins have been the whipping boys, with XRP and XLM especially vulnerable to regulatory headlines. The broader macro picture isn’t helping: Fed officials are talking up aggressive rate cuts, but risk appetite is fragile and liquidity is patchy. The traditional safe havens, gold, the dollar, aren’t offering much cover, and the only thing moving faster than crypto prices is the rumor mill.

What does it all mean? The Ethgate narrative is more than just Twitter drama. It’s a real risk factor that’s being priced into the market, especially for tokens that have already been in the SEC’s crosshairs. XRP’s price action is a case study in regulatory premium, every time the story resurfaces, the bid evaporates and the volatility spikes. XLM, by virtue of its similarity to XRP, gets caught in the crossfire. Meanwhile, Ethereum benefits from the perception (fair or not) that it’s “in the clear.” This dynamic isn’t going away. As long as the regulatory environment is uncertain, expect these narratives to drive short-term price action.

Strykr Watch

Technically, XRP is teetering on a knife edge. The key support zone is at $0.48, with resistance at $0.56. A break below $0.48 opens the door to a retest of the 2025 lows at $0.42. XLM is in a similar spot, with support at $0.10 and resistance at $0.13. Both tokens are trading below their 20-day moving averages, and RSI is deep in oversold territory, XRP at 31, XLM at 29. Volume is up, but it’s all sell-side. Options markets are pricing in a 25% move in either direction over the next month, and perpetual funding rates have flipped negative for both tokens. For Ethereum, the technicals are less dire, support at $2,200, resistance at $2,600, but the spread to XRP and XLM is at a multi-year high.

The risks are obvious. If regulators decide to make an example out of Ripple or Stellar, prices could crater. A new enforcement action, or even a credible rumor, would be enough to trigger another wave of forced selling. There’s also the risk that the Ethgate narrative drags Ethereum into the mud, especially if new documents implicate key insiders. On the technical side, a break of key support levels would invite the algos to pile on, with little liquidity to cushion the fall. And let’s not forget macro risk: a sudden shift in Fed policy or a spike in volatility could hit the entire crypto complex.

But there are also opportunities. For the brave, buying XRP or XLM on a flush to multi-year support levels offers asymmetric upside, especially if the regulatory story fizzles. For the more cautious, pairs trades, long ETH, short XRP/XLM, could capture the widening regulatory premium. Options traders can sell volatility if they think the panic is overdone, but with stops in place. The real play is to watch funding rates and open interest, if the market gets too one-sided, a short squeeze could be in the cards.

Strykr Take

Crypto loves a good conspiracy, but this time the paranoia is justified. The Ethgate narrative isn’t going away, and neither is the volatility. Trade the panic, but don’t marry it. The only thing certain is more drama ahead.

datePublished: 2026-02-03T16:31:00Z