XRP Price Action Turns Bearish on FTX Collapse, with Sub-$0.35 in View

Key Insights:

• On Tuesday, XRP tumbled by 12.74%. A fourth consecutive day in the red left XRP at sub-$0.41.
• SEC v Ripple updates took a backseat, with XRP reacting to the demise of FTX and the SEC’s win in its case against LBRY.
• The technical indicators are bearish, with XRP sitting below the 200-day EMA, signaling a return to sub-$0.35.

On Tuesday, XRP tumbled by 12.74%. Following a 1.15% loss on Monday, XRP ended the day at $0.40637. Notably, XRP fell to sub-$0.35 for the first time since September 19.

Bearish throughout the session, XRP slid from an early high of $0.43422 to a late low of $0.33501. The extended sell-off saw XRP fall through the day’s Major Support Levels. However, XRP found late support to revisit the $0.41 before easing back.

There were no updates from the SEC v Ripple case for investors to consider. However, news of the SEC winning its case against LBRY and the demise of FTX sent XRP and the broader market into a tailspin.

FTX Woes and SEC Victory in LBRY Case Sends XRP South

On Monday, news hit the wires of the SEC winning its case against LBRY. Defense attorney James Filan shared the SEC news, saying,

“New Hampshire Court finds that LBRY offered LBC as a security and that the Fair Notice Defense fails.”

Filan added,

“Court finds “no reasonable trier of fact could reject the SEC’s contention that LBRY offered LBC as a security, and LBRY does not have a triable defense that it lacked fair notice, the SEC is entitled to judgment. The SEC’s Motion for Summary Judgment is granted.”

While the news failed to spook investors, news of FTX facing a liquidity crunch sent the XRP crashing to sub-$0.40. FTX token (FTT) tumbled to its lowest level since April 2020 before a partial recovery to end the day down 75.6%.

Contagion fears spread across the crypto market. News of Binance agreeing to acquire FTX provided some comfort but failed to restore market order. Adding to investor angst is fear of regulatory response, with investors attributing the demise of FTX to Binance’s plans to offload its FTT holdings.

This morning, market conditions remain precarious, with XRP tracking the broader crypto market into negative territory.

Direction today will hinge on updates from Binance, FTX, and other crypto exchanges. While reports of crypto exchanges having little to no exposure to FTX would be positive, news of platforms suspending withdrawals would hit the market for a second session.

Investors will also need to monitor SEC chatter following the SEC win, with references to the SEC v Ripple case likely to influence.

XRP Price Action

At the time of writing, XRP was down 4.92% to $0.38637. A mixed start to the day saw XRP rise to an early high of $0.41045 before falling to a low of $0.38000.

Technical Indicators

XRP needs to move through the $0.4027 pivot to target the First Major Resistance Level (R1) at $0.4703. A return to $0.41 would signal a shift in sentiment.

In the case of an extended rally, the bulls would take a run at $0.50 but likely fall short of the Second Major Resistance Level (R2) at $0.5342. The Third Major Resistance Level (R3) sits at $0.6658.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.3387 in play. However, barring another extended sell-off, XRP should avoid sub-$0.30 and the Second Major Support Level (S2) at $0.2711. The Third Major Support Level (S3) sits at $0.1395.

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 $0.46074. The 50-day EMA crossed through the 200-day EMA, with the 100-day EMA converging on the 200-day EMA. The signals were bearish.

A return to $0.45 would support a move through the EMAs to bring R1 ($0.4703) into play. However, failure to move through the 50-day EMA ($0.46074) would leave S1 ($0.3387) in view.