XRP Bears to Target Sub-$0.36 on Fed Fear and SEC v Ripple Silence

Key Insights:

• On Friday, XRP joined the broader crypto in the red for a second session, falling by 2.57% to end the day at $0.37835.
• SEC v Ripple optimism took a back seat, with US economic indicators and Fed chatter sending the NASDAQ Index and the broader crypto market south.
• The technical indicators remained bearish, signaling a return to sub-$0.36.

On Friday, XRP fell by 2.57%. Following a 1.71% loss on Thursday, XRP ended the day at $0.37835. The bearish session left XRP at sub-$0.38 for the first time since February 13.

A mixed start to the day saw XRP rise to a mid-morning high of $0.39061. Falling short of the First Major Resistance Level (R1) at $0.3954, XRP slid to a late-Friday low of $0.37269. XRP fell through the First Major Support Level (S1) at $0.3834 and the Second Major Support Level (S2) at $0.3785 to end the session at $0.37835.

US Inflation and Hawkish Fed Chatter Mute SEC v Ripple Sentiment

It was a quiet Friday session, with no SEC v Ripple case updates for investors to consider.

A lack of Court rulings or motions left XRP in the hands of the US economic calendar and the NASDAQ Composite Index. The heavily anticipated US inflation numbers on Friday hit riskier assets.

The Core PCE Price Index increased by 4.7% year-over-year in January versus an upwardly revised 4.6% in December. Economists forecast a 4.3% increase. Personal spending rose sharply (+1.8%), with a rise in personal income (+0.30%) adding to the bearish mood.

The latest numbers affirmed market fears of a more aggressive Fed interest rate trajectory to bring inflation to target.

FOMC hawk Loretta Mester wrapped things up, saying,

“It’s going to take more effort on the part of the Fed to get inflation on that sustainable downward path to 2%.”

The NASDAQ Composite Index responded to the stats and Loretta Mester, falling by 1.69%, with the crypto market cap sliding by 2.77% ($29.08 billion).

Hinman Speech Related Documents Give Hope for a Ripple Victory

Investor sentiment toward the ongoing SEC v Ripple case had provided a price cushion ahead of the US stats on Friday. However, the threat of a more aggressive Fed raises the probability of a soft landing amidst heightened regulatory scrutiny, placing more pressure on Ripple to win.

An SEC victory would give the SEC a green card to continue regulating by enforcement. SEC oversight could materially impact the US digital asset space.

As the dust continues to settle from the collapse of FTX, Gary Gensler has ramped up its battle against crypto-related firms. News of SEC ties with FTX and the Hinman speech-related documents could force lawmakers to hand the reins to the CFTX, a favorable scenario for crypto market participants.

It could boil down to the Court ruling on the SEC motion to redact content from the Hinman speech-related documents. The Hinman Documents were in the spotlight this week.

William Hinman remains a central figure in the SEC v Ripple case. 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. Empower Oversight filed against the SEC in 2021.

While the SEC failed to prevent the documents from reaching the hands of the defendants, the SEC filed a motion to redact content from the speech. As a result, the public arena and XRP investors may never gain access to the Hinman documents. The SEC may prefer to settle rather than allow the Hinman documents to become public.

Ripple CEO Brad Garlinghouse shared his views on the speech-related documents, saying,

“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.”

The Day Ahead

Investors should continue to chatter relating to the SEC v Ripple case. Binance and FTX-related updates will also draw interest.

However, we expect SEC activity and US lawmaker chatter to remain the key driver near term, barring a ruling from the Courts on the SEC v Ripple case.

It could be a choppy Saturday session as investors consider the US economic indicators from Friday.  Beyond Fed monetary policy,  regulatory uncertainty will also linger.

XRP Price Action

At the time of writing, XRP was up 0.03% to $0.37822. A mixed start to the day saw XRP fall to an early low of $0.37724 before steadying.

Technical Indicators

XRP needs to move through the $0.3806 pivot to target the First Major Resistance Level (R1) at $0.3884 and the Friday high of $0.39061. A return to $0.3850 would signal a bullish session. However, the broader crypto market and SEC v Ripple chatter would need to support a breakout.

In the case of an extended rally, XRP would likely test the Second Major Resistance Level (R2) at $0.3985. The Third Major Resistance Level (R3) sits at $0.4164.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.3705 in play. However, barring an extended broad-based crypto sell-off, XRP should avoid sub-$0.36. The Second Major Support Level (S2) at $0.3626 should limit the downside. The Third Major Support Level (S3) sits at $0.3447.

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

At the time of writing, XRP sat below the 50-day EMA, currently at $0.38944. The 50-day EMA pulled back from the 200-day EMA, with the 100-day EMA converging on the 200-day EMA. The signals were bearish.

A bearish cross of the 100-day EMA through the 200-day would support a fall through S1 ($0.3705) to bring S2 ($0.3626) into play. However, an XRP breakout from R1 ($0.3884) and the EMAs would give the bulls a run at R2 ($0.3985) and $0.40. An XRP move through the 50-day EMA ($0.38944) would send a bullish signal.