XRP Eyes Sub-$0.3850 on SEC Activity and Hawkish Fed Chatter

Key Insights:

• On Wednesday, XRP joined the broader market in the red, falling by 1.44% to end the day at $0.39798.
• Hawkish Fed chatter and regulatory activity weighed on investor sentiment.
• The technical indicators turned bearish, with XRP sitting below the 200-day EMA, signaling a return to sub-$0.38.

On Wednesday, XRP fell by 1.44%. Partially reversing a 2.97% gain from Tuesday, XRP ended the day at $0.39798. XRP wrapped up the day at sub-$0.40 for the third time in four sessions.

A bullish start to the day saw XRP rally to an early high of $0.40577 before hitting reverse. Coming up short of the First Major Resistance Level (R1) at $0.4089, XRP slid to a late afternoon low of $0.39400. However, finding support at the First Major Support Level (S1) at $0.3945, XRP partially recovered to end the session at $0.39798.

Fed Chatter and Crypto Regulatory Activity Weighed on Sentiment

On Wednesday, FOMC members responded to the US Jobs Report, hitting riskier assets. FOMC members John Williams and Christopher Waller followed Fed Chair Powell’s market-friendly speech from Tuesday with hawkish rhetoric.

FOMC member John Williams talked of a strong labor market and the need to do more to bring inflation to target. Williams reportedly said that a peak rate of 5%-5.25% is still a reasonable view that contrasted with Fed Chair Powell’s hope of rates staying below 5%.

FOMC member Christopher Waller reportedly spoke of needing to keep monetary policy tighter for longer than anticipated.

However, crypto market news was also bearish, with the SEC in the spotlight. Reports of the SEC investigating Kraken for the sale of unregistered securities and rumors of the SEC planning to ban crypto staking added to the bearish mood.

There were no updates from the ongoing SEC v Ripple case to influence.

Today, investors should continue to monitor the crypto news wires for updates from the SEC v Ripple case, FTX, Genesis, and Silvergate Bank. However, US economic indicators and Fed chatter will influence this afternoon. Another decline in initial jobless claims would give the Fed hawks more reason to push for more aggressive policy moves to tackle inflation.

While no FOMC members are on the calendar to speak today, chatter with the media will also provide direction. A slide in jobless claims and hawkish commentary would likely weigh on investor sentiment.

XRP Price Action

At the time of writing, XRP was down 1.94% to $0.39027. A mixed start to the day saw XRP rise to an early high of $0.39925 before sliding to a low of $0.38619. XRP fell through the First Major Support Level (S1) at $0.3927 and briefly through the Second Major Support Level (S2) at $0.3875.

Technical Indicators

XRP needs to move through S1 and the $0.3993 pivot to target the First Major Resistance Level (R1) at $0.4045 and the Wednesday high of $0.40577. 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 an extended rally, XRP would likely test the Second Major Resistance Level (R2) at $0.4110 and resistance at $0.4150. The Third Major Resistance Level (R3) sits at $0.4228.

Failure to move through S1 and the pivot would leave the Second Major Support Level (S2) at $0.3875 in play. However, barring an extended broad-based crypto sell-off, XRP should avoid sub-$0.38 levels and the Third Major Support Level (S3) at $0.3757.

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 $0.39457. The 50-day EMA converged on the 100-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 through the 100-day EMA would support a fall through S2 ($0.3875) to bring sub-$0.3850 into view. However, a move through S1 ($0.3927) and the 200-day EMA ($0.39457) would give the bulls a run at the 100-day ($0.40157) and the 50-day ($0.40189) EMAs. A move through the 50-day EMA would send a bullish signal.