XRP Bears to Target $0.4150 as SEC v Ripple Optimism Wanes

Key Insights:

• On Sunday, XRP joined the broader crypto market in positive territory, gaining 0.20% to end the day at $0.42523.
• Easing fears of a US Government default on payments delivered support though the upside was modest as investors await SEC v Ripple Court rulings.
• However, the technical indicators remain bearish, signaling a return to $0.40.

On Sunday, XRP rose by 0.20%. Partially reversing a 1.44% loss from Saturday, XRP ended the week down 5.35% to $0.42523. Despite the bullish session, XRP failed to hold onto the $0.43 handle for a second consecutive day.

A bearish start to the day saw XRP fall to a first-hour low of $0.42154. Finding support at the First Major Support Level (S1) at $0.4218, XRP rose to a mid-afternoon high of $0.4316. XRP broke through the First Major Resistance Level (R1) at $0.4286 before briefly falling to sub-$0.4250. However, a bullish end to the day saw XRP wrap up the session at $0.42523.

SEC v Ripple Angst Leaves XRP at Sub-$0.43

It was a quiet end to the week for the XRP Community, with no SEC v Ripple case updates to influence. The lack of Court rulings left investors in limbo, with hopes of Court activity in May fading fast.

Investor optimism toward a Ripple victory has waned in recent weeks. The longer presiding Judge Torres takes to deliver Court rulings, the more jittery investors will likely become. However, the deliberation may be lengthy considering the likely impact of the result on the US regulatory landscape.

Ripple and the Defendants still have the Hinman documents card to play if needed. The SEC and the Defendants have been silent on the subject that had drawn plenty of attention at the turn of the year.

In February, Ripple CEO Brad Garlinghouse had this to say about the Hinman docs,

“When those come to light, I think you will see more kind of like, how is it possible for the SEC to decide to bring a case against Ripple given what they were saying within their own walls.”

By way of background, William Hinman remains a central figure in the SEC v Ripple case. In a famous 2018 speech, former SEC Director of the Division of Corporation Finance William Hinman said that Bitcoin (BTC) and Ethereum (ETH) are not securities.

The contentious issue with the speech relates to Hinman’s connection with Simpson Thacher. Simpson Thacher is part of a group that promotes Enterprise Ethereum. After leaving the SEC, Hinman returned to Simpson Thacher.

SEC attempts to shield the documents from the public under the attorney-client privilege failed, with the Courts forcing the SEC to hand the documents to the Defendants. The content of the speech-related documents remains under lock and key but could influence the outcome of the case.

US President Joe Biden Delivers Support

While the lack of progress in the ongoing SEC v Ripple case remains a headwind, easing fears of a US debt crisis provided support.

Over the weekend, US President Joe Biden provided some comfort, reportedly saying both sides are interested in reaching an agreement. The fallout from a US government default on payments would weigh on riskier assets.

The Day Ahead

It is a busy start to the week for XRP and the broader crypto market.

NY Empire State Manufacturing Index numbers for May will be in focus this afternoon. Economists forecast a fall from 10.8 to -2.5. An Index return to negative territory would fuel recessionary jitters and weigh on BTC and the broader crypto market.

However, while the stats will draw interest, investors should monitor FOMC member speeches. FOMC members Kashkari, Bostic, and Barkin will speak today. Hawkish chatter would be bearish as investors search for clues on what is next from the Fed.

According to the CME FedWatch Tool, there was a 14.4% chance of a 25-basis point interest rate hike in June, down from 15.5% on Friday.

The US banking sector and the US debt ceiling will also need monitoring.

While the US economic calendar will provide direction, SEC v Ripple case-related updates remain the focal point.

Investors should also monitor SEC activity and Binance and Coinbase (COIN)-related news. The crypto market could face renewed US lawmaker scrutiny as the US Government grapples with the threat of a debt crisis and a deepening banking crisis.

XRP Price Action

At the time of writing, XRP was down 0.20% to $0.42436. A mixed start to the day saw XRP rise to an early high of $0.42579 before falling to a low of $0.42218.

Technical Indicators

Resistance & Support Levels

XRP needs to move through the $0.4261 pivot to target the First Major Resistance Level (R1) at $0.4307 and the Sunday high of $0.43160. A return to $0.43 would signal a bullish session. However, SEC v Ripple updates and Fed chatter must support a breakout session.

In the case of an extended rally, XRP would likely test the Second Major Resistance Level (R2) at $0.4362 and resistance at $0.44. The Third Major Resistance Level (R3) sits at $0.4462.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.4206 in play. However, barring a crypto event or risk-off-fueled sell-off, XRP should avoid sub-$0.4150. The Second Major Support Level (S2) at $0.4161 should limit the downside. The Third Major Support Level (S3) sits at $0.4060.

The EMAs and the 4-hourly candlestick chart (below) sent bearish signals.

At the time of writing, XRP sat below the 50-day EMA, currently at $0.43251. The 50-day EMA fell back from the 200-day EMA, with the 100-day EMA pulling back from the 200-day EMA. The EMAs delivered bearish signals.

A move through R1 ($0.4307) and 50-day EMA ($0.43251) would give the bulls a run at R2 ($0.4362) and $0.44. However, failure to move through the 50-day EMA ($0.43251) would leave S1 ($0.4206) and sub-$0.42 Major Support Levels in view. A move through the 50-day EMA would send a bullish signal.