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XRP Bulls to Target a Return to $0.40 or Face Sub-$0.37 on SEC Chatter

By:
Bob Mason

Following a modest gain on Friday, XRP was in the red this morning. SEC regulatory action and the SEC v Ripple case become investor focal points.

XRP - Technical Analysis - FX Empire.

In this article:

Key Insights:

  • On Friday, XRP bucked the broader crypto market trend, rising by 0.14% to end the day at $0.38218.
  • Fed Fear and regulatory risk pegged XRP back from a return to $0.40 while hopes for a favorable outcome to the SEC v Ripple case delivered support.
  • The technical indicators are bearish, with XRP sitting below the 200-day EMA, signaling a return to sub-$0.37.

On Friday, XRP rose by 0.14%. Following a 4.10% slide from Thursday, XRP ended the day at $0.38218. XRP revisited sub-$0.38 for the second time since January 19.

A bullish start to the day saw XRP rise to an early morning high of $0.38761 before hitting reverse. Coming up short of the First Major Resistance Level (R1) at $0.4025, XRP fell to a mid-afternoon low of $0.37770. However, steering clear of the First Major Support Level (S1) at $0.3669, XRP revisited the $0.384 handle before easing back.

Optimism Toward the SEC v Ripple Case Delivers a Price Cushion

On Friday, there were no updates from the ongoing SEC v Ripple case to influence investor sentiment. However, Amicus Curiae attorney John Deaton was in action, filing a Motion to File an Amicus Brief in Zakinov v Ripple in California.

By way of background, the plaintiffs claim that Ripple sold XRP as an unregistered security and are asking the Court to certify a class of all XRP holders who purchased and now hold XRP or sold XRP at a loss.

The issue with the claim is that the proposed class would include 75,890 XRP holders who disagree with the small number of plaintiffs. Additionally, some XRP holders reside in countries that have already determined that XRP is not a security.

However, the latest news had a muted impact on XRP though optimism for a favorable outcome to the case delivered Friday support.

SEC Regulation by Enforcement Draws Criticism

While investors wait for Court rulings from the SEC v Ripple case, sentiment toward SEC regulation by enforcement will influence investor appetite. On Friday, Ripple CEO Brad Garlinghouse shared his views about the SEC and US crypto market regulations.

Garlinghouse said,

“Stepping back for a moment from what’s happening in the US – just in the last few weeks, the number of positive (or at least headed in the direction of CLARITY) global regulatory developments is energizing!”

Highlighting the effects of proactive regulatory activity, Garlinghouse added,

“The list goes on (Brazil’s new legislative framework, etc.). Note the commonalities – these regulators are providing leadership and doing the work that we are desperately missing in the US – unsurprisingly, this is where companies like Ripple are growing!”

News of Kraken settling with the SEC and ceasing US crypto staking services has left investors in regulatory limbo. The absence of a regulatory framework gives the SEC the freedom to regulate by enforcement, which adversely affects investor sentiment and crypto price action.

Kraken CEO Jesse Powell had this to say,

“Oh man, all I had to do was fill out a form on a website and tell people that staking rewards come from staking? Wish I’d seen this video before paying a $30m fine and agreeing to permanently shut down the service in the US. How dumb do I look. Gosh.”

Powell also called on US lawmakers to protect the crypto industry, saying,

“Congress must act to protect the domestic crypto industry and US consumers who will now be going offshore to obtain services no longer available in the US.”

SEC v Ripple Becomes More High Profile

For Kraken and the US crypto market, the outcome of the SEC v Ripple case has become more significant. It could boil down to the William Hinman speech-related documents.

As background, 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 related to Hinman’s connection with Simpson Thacher, which is part of a group that promotes Enterprise Ethereum. After leaving the SEC, Hinman returned to Simpson Thacher.

The SEC has been desperate in its attempts to prevent the speech-related documents from reaching the public arena.

Speaking from Davos in January, 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.”

Today, investors should continue to monitor the crypto news wires for updates from the SEC v Ripple case. However, a lack of updates will leave SEC chatter and crypto staking in the spotlight.

XRP Price Action

At the time of writing, XRP was down 0.07% to $0.38193. A mixed morning saw XRP fall to an early low of $0.38048 before rising to a high of $0.38384.

XRP sees morning red.
XRPUSD 110223 Daily Chart

Technical Indicators

XRP needs to move through the $0.3825 pivot to target the First Major Resistance Level (R1) at $0.3873 and the Friday high of $0.38761. 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 $0.3924 and resistance at $0.40. The Third Major Resistance Level (R3) sits at $0.4023.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.3774 in play. However, barring an extended broad-based crypto sell-off, XRP should avoid sub-$0.37 levels. The Second Major Support Level (S2) at $0.3726 should limit the downside. The Third Major Support Level (S3) sits at $0.3627.

XRP support levels in play below the pivot.
XRPUSD 110223 Hourly Chart

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

At the time of writing, XRP sat below the 200-day EMA, currently at $0.39350. The 50-day EMA closed in on the 200-day EMA, with the 100-day EMA narrowing to the 200-day EMA. The signals were bearish.

A bearish cross of the 50-day EMA ($0.39517) through the 200-day EMA ($0.39350) would support a slide through S1 ($0.3774) to bring S2 ($0.3726) into view. However, a move through R1 ($0.3873) would give the bulls a run at R2 ($0.3924) and the 200-day ($0.39350) and 50-day ($0.39517) EMAs. A move through the 50-day EMA would send a bullish signal.

EMAs are bearish.
XRPUSD 110223 4 Hourly Chart

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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