XRP Eyes $0.42 on Shift in Investor Sentiment and SEC v Ripple Optimism

Key Insights:

• On Friday, XRP rose by 2.85% to end the day at $0.39530.
• SEC v Ripple silence left XRP in the hands of the broader crypto market, which enjoyed a breakout session.
• The technical indicators turned bullish, signaling a return to $0.45.

On Friday, XRP rose by 2.85%. Partially reversing a 4.20% slide from Thursday, XRP ended the day at $0.39530. Despite the bullish session, XRP fell short of the $0.40 handle for the first time in three sessions.

A bearish start to the day saw XRP fall to a first-hour low of $0.38142 before making a move. Steering clear of the First Major Support Level (S1) at $0.3776, XRP rallied to a late high of $0.39985. XRP broke through the First Major Resistance Level (R1) at $0.3978 before easing back to end the day at $0.39530.

SEC v Ripple Case Becomes Crypto Market Critical

On Friday, there were no updates from the ongoing SEC v Ripple case to provide XRP price direction. The lack of updates left XRP in the hands of the broader crypto market.

Following the SEC moves against Kraken and Binance USD (BUSD), regulatory risk subsided in the second half of the week. US lawmaker scrutiny of the SEC eased fears that the SEC will have free reign to target US crypto-related firms.

As investors await Court rulings from the SEC v Ripple case, optimism toward the result of the SEC v Ripple case continued to deliver price support. A Ripple victory could force US lawmakers to task the CFTC with regulating the digital asset space.

After reports of SEC ties with FTX and former CEO Sam Bankman-Fried, Gary Gensler will want to avoid further embarrassment.

William Hinman Remains a Central Figure in the SEC Case v Ripple

Investors continue to see the William Hinman speech-related documents as the SEC’s Achilles Heel. The threat of the speech-related documents becoming publicly available could force the SEC to settle.

With increased US lawmaker scrutiny over the SEC actions following the FTX bankruptcy, further embarrassment could force lawmakers to hand the reins to the CFTC, a favorable outcome for crypto market leaders.

The focus on the William Hinman speech-related documents reflects the significance of the Hinman speech-related documents and how the content can influence the case.

Before the SEC filed its Summary Judgment Reply brief and motion to redact content from the documents, the SEC made at least six attempts to shield the documents under the attorney-client privilege. The Court ruled against the SEC on each occasion, eventually forcing the SEC to hand the documents over to the Ripple defense team.

However, Ripple is not alone in its battle against the SEC over 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 in a famous speech.

In late 2021, Empower Oversight filed a lawsuit against the SEC, alleging that former SEC officials were biased against Ripple Lab and XRP.

Empower Oversight claims that William Hinman received millions of dollars from his former employer while helping guide the SEC’s regulation of cryptocurrencies. At the time, he was a former employer of Simpson Thacher, which is part of a group that promotes Enterprise Ethereum. Hinman returned to Simpson Thacher after leaving the SEC.

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.”

The Day Ahead

Investors should continue monitoring the crypto news wires for updates from the SEC v Ripple case. A lack of updates would leave XRP in the hands of the broader crypto market.

Easing regulatory risk and US lawmaker support remain tailwinds. However, the crypto market will need a crypto regulatory framework to remove the uncertainty that the SEC creates through its regulation by enforcement.

In addition to SEC and US lawmaker chatter, investors should monitor Binance, FTX, Genesis, and Silvergate Bank updates. A BTC return to $25,000 and hold would send a bullish signal.

XRP Price Action

At the time of writing, XRP was down 0.23% to $0.39440. A mixed start to the day saw XRP rise to an early high of $0.39579 before falling to a low of $0.39386.

Technical Indicators

XRP needs to avoid a fall through the $0.3922 pivot to target the First Major Resistance Level (R1) at $0.4030. A return to $0.40 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 another extended rally, XRP would likely test the Second Major Resistance Level (R2) at $0.4106 and resistance at $0.4150. The Third Major Resistance Level (R3) sits at $0.4291.

A fall through the pivot would bring the First Major Support Level (S1) at $0.3845 into play. However, barring an extended broad-based crypto sell-off, XRP should avoid sub-$0.38 and the Second Major Support Level (S2) at $0.3738. The Third Major Support Level (S3) sits at $0.3553.

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

At the time of writing, XRP sat above the 100-day EMA, currently at $0.39105. The 50-day EMA narrowed on the 200-day EMA, with the 100-day EMA pulling away from the 200-day EMA. The signals were bullish.

A bullish cross of the 50-day EMA through the 200-day would support a breakout from R1 ($0.4030) to target R2 ($0.4106) and $0.4150. However, a fall through the 100-day ($0.39105) and 200-day ($0.39060) EMAs would bring the 50-day EMA ($0.38861) and S1 ($0.3845) into play. A fall through the 50-day EMA would send a bearish signal.