XRP Faces Sub-$0.3550 on SEC Regulation by Enforcement

Key Insights:

• On Monday, XRP fell by 1.14% to end the day at $0.37066.
• Crypto regulatory risk and SEC activity left XRP in negative territory for a second consecutive session.
• The technical indicators are bearish, with XRP sitting below the 200-day EMA, signaling a return to sub-$0.35.

On Monday, XRP fell by 1.14%. Following a 2.29% decline on Sunday, XRP ended the day at $0.37066. XRP visited sub-$0.37 for the first time since January 13.

A mixed start to the day saw XRP rise to an early morning high of $0.37838 before hitting the reverse. Coming up short of the First Major Resistance Level (R1) at $0.3825, XRP slid to a late morning low of $0.3621. XRP briefly fell through the First Major Support Level (S1) at $0.3698 and the Second Major Support Level (S2) at $0.3646 before finding late support.

SEC Sends XRP into the Red on SEC v Ripple Silence

On Monday, there were no updates from the ongoing SEC v Ripple case to draw investor interest. The lack of news left XRP in the hands of the crypto news wires and the broader crypto market.

Following the news of Kraken settling with the SEC by ceasing to offer US staking services, Paxos and Binance USD (BUSD) became the SEC’s latest target.

On Monday, news hit the wires of the SEC preparing to sue Paxos for the issuance and listing of Binance USD (BUSD). The SEC cited that the firm violated investor protection laws.

XRP holders and Ripple will be aware of the SEC’s views on cryptocurrencies and the Howey Test. However, with investors acquiring BUSD with no expectation of profit in purchasing BUSD, the latest SEC move had the market scratching its head.

Ripple Chief Legal Officer Stuart Alderoty had this to say,

“Over 40 million Americans own crypto. Most of these are between the ages of 18-34 and are demographically and racially diverse. That’s a lot of votes. Gary Gensler is a political liability.”

Binance CEO CZ also shared his views, saying,

“IF BUSD is ruled as a security by the courts, it will have profound impacts on how the crypto industry will develop (or not develop) in the jurisdictions where it is ruled as such.”

While US lawmakers remained silent on the latest SEC attack, crypto market leaders mobilized this week. Coinbase (COIN) CEO Brian Armstrong tweeted,

“I’m in Washington DC and had a meeting canceled. Will be at the Dirksen Senate Office building snack bar for the next hour or so if anyone wants to come and chat about crypto and how we get crypto legislation + regulatory clarity this year.”

A Ripple Victory in the SEC v Ripple Case Needed to Change the Dynamic

With the SEC taking more aggressive steps against the digital asset space, the SEC v Ripple case could bring the SEC’s rein of regulation by enforcement to an abrupt end.

The case now sits with presiding Judge Torres. While various outcomes are possible, William Hinman remains a central figure in the SEC v Ripple case and the Empower Oversight v SEC case.

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.

In the SEC v Ripple case, the SEC made at least six attempts to shield the William Hinman speech-related documents under attorney-client privilege before filing a motion to redact content from the 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.

Should the Court deny the SEC motion to redact, and the case goes to trial, the Hinman speech-related documents would become a matter of public record. If the content is as damming as many suspect, Gary Gensler and the SEC may think their days are numbers.

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

It could be another choppy session, with the heavily anticipated US CPI Report likely to put the Fed in the spotlight. However, SEC activity will likely have more influence on investor appetite.

Investors should monitor the crypto news wires for updates on the SEC v Ripple case and SEC activity.

XRP Price Action

At the time of writing, XRP was down 1.06% to $0.36674. A bearish start to the day saw XRP fall from an early high of $0.37059 to a low of $0.36579.

Technical Indicators

XRP needs to move through the $0.3704 pivot to target the First Major Resistance Level (R1) at $0.3787. A move through the Monday high of $0.37838 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 $0.3867. The Third Major Resistance Level (R3) sits at $0.4029.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.3624 in play. However, barring another extended broad-based crypto sell-off, XRP should avoid sub-$0.3550 levels and the Second Major Support Level (S2) at $0.3541. The Third Major Support Level (S3) sits at $0.3378.

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 $0.38585. 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 EMA would support a slide through S1 ($0.3624) to bring S2 ($0.3541) into view. However, a move through R1 ($0.3787) would give the bulls a run at the 50-day EMA ($0.38585) and R2 ($0.3867). A move through the 50-day EMA would send a bullish signal.