XRP Bulls to Target $0.55 in Response to US Division on Cryptos

Key Insights:

• On Tuesday, XRP surged by 4.07% to end the day at $0.53189.
• Sentiment toward the SEC v Ripple case and the Oversight of the Securities and Exchange Commission Hearing on Capitol Hill delivered support.
• The technical indicators were bullish, signaling a run at $0.55.

On Tuesday, XRP jumped by 4.07%. Reversing a 1.94% gain from Monday, XRP ended the day at $0.53189. XRP avoided sub-$0.50 for the sixth consecutive session while revisiting $0.53 for the first time in four sessions.

A mixed start to the day saw XRP fall to an early low of $0.50962. Steering clear of the First Major Support Level (S1) at $0.5050, XRP rose to a final-hour high of $0.53827. XRP broke through the First Major Resistance Level (R1) at $0.5191 and the Second Major Resistance Level (R2) at $0.5271 to end the day at $0.53189.

SEC Chair Grilling and China GDP Numbers Deliver Support

There were no updates from the ongoing  SEC v Ripple case to influence investor sentiment on Tuesday. The lack of rulings from the case left XRP in the hands of the global economic calendar, US corporate earnings, Fed chatter, and the Oversight of the Securities and Exchange Commission hearing on Capitol Hill.

However, mixed US corporate earnings and Fed chatter left the Gary Gensler testimony on Capitol Hill and US economic indicators from China to fuel a breakout session.

Early in the Tuesday session, hotter-than-expected Q1 GDP numbers from China delivered a morning move. However, SEC Chair Gary Gensler testimony on Capitol Hill was the key to the breakout session.

Patrick McHenry, US House Financial Services Committee Chairman, was quick off the blocks, asking whether ETH is a commodity or a security. McHenry demonstrated the lack of clarity that plagues the digital asset space by highlighting the conflicting views of the SEC, the CFTC, and the New York State attorney.

Significantly, McHenry’s views aligned with Judge Wiles, the presiding judge in the Voyager Digital bankruptcy case.

US Regulatory Landscape Drives Innovation Overseas

In March, the Ripple defense team filed a Letter Notice of Supplemental Authority supporting their fair notice defense. The letter referenced the views of Judge Wiles, noting,

“Judge Wiles found that cryptocurrency market participants operate in a regulatory environment that at best can be described as highly uncertain, in which regulators themselves cannot seem to agree as to whether cryptocurrencies are commodities that may be subject to regulation by the CFTC or whether they are securities that are subject to securities laws, or neither, or even on what criteria should be applied in making the decision.”

The letter went on to quote Judge Wiles, who said,

“An uncertainty has persisted despite the fact that cryptocurrency exchanges have been around for a number of years.”

Considering the lack of transparency, division on Capitol Hill, and failure of regulators to agree on the classification of cryptos paints a rosier picture for the Ripple defense.

This week, the newly launched Ripple Liquidity Hub and the exclusion of XRP raised eyebrows, forcing an official response.

Stuart Alderoty, Ripple’s Chief Legal Officer, provided some background to excluding XRP from the Ripple Liquidity Hub, saying,

“Can’t join the Spaces today but wanted to clarify some Qs on our newest product Liquidity Hub. 1/ LH is an enterprise (institutional) product, not retail. In the US, there is little liquidity for XRP. We’re keen to support XRP in LJ when we can provide a good customer experience.”

Alderoty added,

“Also, as previously stated in our blog post – XRP does not have regulatory clarity in the US, which is, of course, important to enterprise customers.”

The issue of regulatory clarity and the decision to omit XRP reflects sentiment across the US crypto space. Coinbase, Ripple, and other crypto-related platforms are focused on expanding beyond US borders, raising innovation concerns.

Patrick McHenry had this to say about innovation during Tuesday’s hearing,

“Your approach is driving innovation overseas and endangering American competitiveness.”

The Day Ahead

Updates from the ongoing SEC v Ripple case will remain the key driver. However, a lack of SEC v Ripple case-related news will leave XRP in the hands of regulatory activity and Binance and Coinbase (COIN)-related commentary.

Following the Tuesday grilling, Gary Gensler and the team may look to change the narrative and target a leading platform, which would test buyer appetite.

In the afternoon session, there are no US economic indicators to draw interest. However, Fed chatter will remain a focal point as investors attempt to second-guess Fed moves beyond May.

XRP Price Action

At the time of writing, XRP was down 0.75% to $0.52788. A mixed start to the day saw XRP rise to an early high of $0.53705 before falling to a low of $0.52671.

Technical Indicators

Resistance & Support Levels

XRP needs to avoid the $0.5266 pivot to target the First Major Resistance Level (R1) at $0.5436. A move through the Tuesday high of $0.53827 would signal a bullish session. However, 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 $0.5552 and resistance at $0.56. The Third Major Resistance Level (R3) sits at $0.5839.

A fall through the pivot would bring the First Major Support Level (S1) at $0.5149 into play. However, barring an extended sell-off, XRP should avoid sub-$0.50 and the Second Major Support Level (S2) at $0.4979. The Third Major Support Level (S3) sits at $0.4693.

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

At the time of writing, XRP sat above the 50-day EMA, currently at $0.51610. The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA. The EMAs delivered bullish signals.

A hold above the 50-day EMA ($0.51610) would support a breakout from R1 ($0.5436) to target R2 ($0.5552) and $0.56. However, a fall through the 50-day EMA ($0.51610) would bring S1 ($0.5149) and the 100-day EMA ($0.50814) into view. A fall through the 50-day EMA would send a bearish signal.