- XRPUSD in a tight trading range
- Ripple vs. SEC legal tussle
- Risk-off mood impact on cryptocurrencies
Ripple (XRP) cryptocurrency is holding steady as positive sentiment in the broader cryptocurrency market continues to deliver positive price action. In recent days, the coin has posted solid gains as investors react to favorable developments as part of an ongoing legal case between Ripple, the company, and the Securities Exchange Commission.
XRPUSD price action
Consequently, the XRPUSD pair appears to have found support above the $0.69 level from where it is trying to bounce back after a 60% correction from all-time highs. While bulls have struggled to steer the pair above the $0.90 level, short-term resistance, the upward momentum has been gathering pace in recent days.
XRPUSD registering higher highs is already fuelling suggestions that the coin is ready to bottom out after a steep pullback from all-time highs. The Relative Strength Index indicator rising above the 50 level all but affirms a buildup in buying pressure supporting further price gains.
Therefore, XRP rising and finding support above the $0.80 level would heighten the prospect of bulls fuelling a rally past the $0.90 resistance level. On the flip side, failure to rally and find support above the $0.80 level could leave XRP susceptible to plunging back to the $0.69 level, the next substantial support level.
Recent Developments
Ripple vs. SEC
One of the factors supporting XRPUSD’s bounce back is a Federal judge in the US ruling in favor of Ripple against the Securities and Exchange Commission. In the lawsuit, Ripple CEO Brad Garlinghouse and executive chairman Chris Larsen are accused of carrying out unregistered securities offerings totaling $1.3 billion through the distribution of XRP tokens.
In his ruling, the Federal judge has allowed an argument that indicates Ripple, its CEO, and the executive chairman did not receive fair notice on claims they violated securities law. Consequently, the judge has struck down a motion by the SEC that sought to prevent Ripple from using the fair notice defense. In recent months, the ongoing legal tussle has dented Ripple sentiments in the market. Therefore any small win in the corridors of justice was always going to offer support to XRPUSD bulls.
US executive order
President Joe Biden signing an executive order asking the federal government to coordinate an approach on digital assets is another factor offering support to the cryptocurrency sector and Ripple. The executive orders call for various government agencies and departments to answer specific questions about cryptocurrencies and the underlying blockchain technology.
The push is seen as one of the early signs of the US government’s willingness to regulate the sector, which could set the stage for mainstream adoption. Many institutions and institutional investors have so far shrugged the sector due to its unregulated nature.
The bear case
Amid the factors working in favor of the burgeoning cryptocurrency sector, there are a number of headwinds that continue to curtail strong price gains. The risk-off mood sentiment in the capital market amid the ongoing geopolitical tensions has weighed heavily on Ripple and other cryptocurrencies.
Investors scampering for safety in safe-havens such as Gold and the US dollar and shrugging off riskier assets such as cryptocurrencies have also fueled the downside pressure on XRPUSD. Rising inflation is another factor that has weighed immensely on investors’ ability to ramp up investments on riskier assets such as cryptocurrencies.
The significant increase in basic commodity prices has left investors with little capital to spare and invest in riskier assets. In addition, concerns that the US Federal Reserve will embark on aggressive monetary policy tightening that involves interest rate hikes have kept investors seeking opportunities in high-yielding investments such as bonds. Ripple could remain under pressure in the short term, as has been the case for the better part of the past few months.
