- Ripple turns bearish
- Ripple suffers setback in court
- Ripple trading volume wane
Ripple is under immense pressure at the start of the week, even as the broader cryptocurrency market holds steady after a recent correction lower. The coin starts the week on the defensive after four consecutive weeks of losses.
XRP technical analysis
A breach of key support levels has left Ripple on the brink of plunging to 2022 lows amid a short-selling pressure surge at the back of low investor interest. As part of an ongoing lawsuit with the Securities and Exchange Commission, a setback continues to weigh heavily on the flagship payment cryptocurrency.
XRPUSD has since plunged below the pivotal $0.70 level affirming short sellers are in control. In addition, technical indicators led by the 200-day moving average affirm the sell-off wave after recent price rejection near the $0.80 level. The Relative Strength Index is pointing lower after tanking below the 50 level underscoring the bearish momentum.
As XRPUSD languishes at the $0.65 level with bears in control, the next stop could be the $0.63 area, seen as the next substantial support level. A daily close below the $0.66 should accelerate the drop to the $0.62 support level.
On the flip side, bulls will have to steer a rally past the $0.70 level to avert further downside action. A daily close above the $0.70 could pave the way for XRPUSD to make a run for the $0.75 area, a key resistance level.
Why is XRP dropping?
Ripple remains under pressure, having emerged that the long-running lawsuit involving the SEC over the sale of XRP securities will not be concluded this year. The case is slated to end next year after the two parties have agreed to a lengthy extension. In the lawsuit, Ripple Labs executives are accused of conducting illegal security offerings from one of the XRP digital assets.
According to the SEC, XRP is known as a security in the cryptocurrency market and is not a cryptocurrency. Ripple has refuted the claims insisting that XRP is like any other cryptocurrency and therefore not subject to strict securities laws.
The SEC scoring a minor victory last week on Judge Sarah Netburn denying Ripple Lab’s motion to strike the supplemental report file by SEC expert Albert Metz has taken a significant toll on Ripple sentiments in the market.
In addition to the SEC setback, XRP sentiments have also taken a hit on confirmation of a decline in investor interest. The immediate indication is that Ripple trading volume is on the decline, fuelled by an overall bearish trend in the crypto market.
Trading volume decline
XRP monthly trading volume has dropped below the $100 billion in 2022, an indication of waning investor interest. The crypto had a combined trading volume of $203 billion in the first quarter, a 68% dip from levels recorded in the first quarter of last year at over $640 billion.
In addition, XRPUSD has remained under pressure on the US dollar, strengthening to two-year highs in the market. Dollar strength has come at the back of Treasury yields rallying amid expectations of accelerated rate hikes by the US Federal Reserve. Hawkish comments by FED officials have only gone to fuel dollar strength and strong demand for yield assets at the expense of speculative investments such as Ripple.
Ripple looks set to remain under pressure in the short term as the overall cryptocurrency market remains under pressure as well. However, its long term outlook remains bullish amid the role XRP continues to play in powering crossbred payments.