XRP Faces the Risk of Sub-$0.37 on Rising US Regulatory Activity

Key Insights:

• On Sunday, XRP fell by 2.12% to end the day at $0.38609.
• A bearish crypto market session and SEC v Ripple angst left XRP in negative territory.
• The technical indicators turned bearish, signaling a return to sub-$0.36.

On Sunday, XRP fell by 2.12%. Following a 0.22% decline on Saturday, XRP ended the week up 2.98% to $0.38609. Despite the bearish session, XRP avoided sub-$0.38 levels for the fourth consecutive session.

After a choppy morning session, XRP rose to a late afternoon high of $0.39760 before hitting reverse. Coming up against the First Major Resistance Level (R1) at $0.3974, XRP slid to a late low of $0.38521. XRP fell through the First Major Support Level (S1) at $0.3915 and the Second Major Support Level (S2) at $0.3885 to end the day at $0.38609.

Regulatory Risk and SEC v Ripple Uncertainty Weighed

On Sunday, there were no updates from the ongoing SEC v Ripple case to influence investor sentiment. The continued silence from the Courts left XRP in the hands of the broader crypto market and SEC v Ripple chatter.

Amicus Curiae attorney John Deaton shared his latest views on the SEC’s case against Ripple, saying,

“Once again, I will say: Ripple’s offers and sales of XRP may have violated US securities laws. And if the SEC were only pursuing Ripple’s sales, I would have never filed a suit against the SEC.”

Deaton went on to say,

“But claiming an asset (alphanumeric sequence) was, is, and always will be, no matter the seller or the circumstances surrounding the sale, a security, is insane and there isn’t one case in 76 years since Howey that supports such an absurd claim.”

While investors remain hopeful for a positive outcome to the case, the increased regulatory scrutiny of the digital asset space has tested buyer appetite. We have seen XRP struggle during periods of increased regulatory activity, which will likely continue as the markets await the rulings on the SEC v Ripple case.

With no regulatory framework in sight, the US crypto market will remain at the mercy of US regulators and a Securities & Exchange Commission intent on regulating by enforcement.

The Day Ahead

With the US markets closed, there are no external market forces to guide investors today. However, the crypto news wires will continue to provide direction. Investors should continue to monitor Binance, FTX, Genesis, and Silvergate Bank news and chatter relating to the SEC v Ripple case.

We expect SEC activity and US lawmaker chatter to remain the key driver, barring a ruling from the Courts on the SEC v Ripple case.

XRP Price Action

At the time of writing, XRP was up 0.16% to $0.38671. A choppy start to the day saw XRP slide to an early low of $0.3775 before steadying. XRP briefly fell through the First Major Support Level (S1) at $0.3817 to test the Second Major Support Level (S2) at $0.3772.

Technical Indicators

XRP needs to move through the $0.3896 pivot to target the First Major Resistance Level (R1) at $0.3941 and the Sunday high of $0.3976. A return to $0.39 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 $0.4020. The Third Major Resistance Level (R3) sits at $0.4144.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.3817 in play. However, barring an extended broad-based crypto sell-off, XRP should avoid sub-$0.3750. The Second Major Support Level (S2) at $0.3772 should limit the downside. The Third Major Support Level (S3) sits at $0.3649.

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 $0.38980. The 50-day EMA pulled back from the 200-day EMA, with the 100-day EMA narrowing to the 200-day EMA. The signals were bearish.

A bearish cross of the 100-day EMA through the 200-day would support another fall through S1 ($0.3817) to bring S2 ($0.3772) back into play. However, a move through the 50-day EMA ($0.38980) would support a breakout from 200-day ($0.39075) and 100-day ($0.39124) EMAs to give the bulls a run at R1 ($0.3941). A move through the 50-day EMA would send a bullish signal.