Ripple’s XRP Drops 5%: Why Long-Term Indicators Remain Positive

Crypto investors are still enjoying the recent gains
from Ripple’s XRP, a cryptocurrency with the potential to reshape global
payments. This is despite the price correction of nearly 5% in the last day.

Recent crypto market rally and optimism around
friendly crypto regulations could be some of the factors that pushed XRP to
high price levels last seen seven years ago. The price remains high in the
monthly, yearly, and all-time price charts.

In the past month, XRP has climbed an astonishing 330%, reaching $2.85. Amid the positive sentiment, XRP now ranks as the fourth largest cryptocurrency with a market capitalization of $130 billion. However, trading volumes in the past day have declined 47% to $13 billion, and the digital asset has lost some of its gains.

XRP’s Journey

Ripple’s journey has been anything but smooth. For
years, XRP faced regulatory uncertainty, most notably the US SEC’s lawsuit
alleging Ripple’s unregistered security sales. However, a landmark ruling was given in 2023, where
the court declared that XRP was not a security when sold to the public,
significantly reducing regulatory pressure.

However, the judge handed the SEC a partial victory
after declaring that selling $728.9 million of XRP tokens to hedge funds and
other sophisticated amounted to offering unregistered securities.

The court later ordered Ripple to pay $125 million in
civil penalties and imposed an injunction against future violations of
securities laws. This was a relief for the company since the SEC had earlier
sought $1 billion in disgorgement and prejudgment interest and $900 million in
civil penalties.

The most important part of this ruling: “XRP, as a digital token, is not in and of itself a “contract, transaction[,] or scheme” that embodies the Howey requirements of an investment contract.” This is a now a matter of law (not up for trial.)

— Brad Garlinghouse (@bgarlinghouse) July 13, 2023

Although Ripple faced a $125 million penalty, the
decision sparked investor confidence. Adding to the momentum, Donald Trump’s
recent presidential election victory on a pro-crypto platform has energized the
market.

Trump has appointed a crypto-friendly SEC Chair, Paul
Atkins, a former commissioner who served under President George W. Bush. This
step pushed Bitcoin past the much-anticipated $100,000 price level, a bullish
momentum that also extended to the altcoins, including XRP.

Positive Technical Indicators

According to technical analysis, XRP has been confined to a price resistance level of $0.7 and a support level of $0.3 since 2012. However, the recent rally pushed the price past the $1.5 price resistance level, which was
achieved in the 2021 bull market.

However, technical indicators show the market is
overbought, and the price could drop, at least in the short term. The Relative Strength Index (RSI), a metric that assesses the speed and magnitude of price, is at
80 on TradingView. The price is also above the 50 and 200 moving averages.

Open Interest for XRP futures has reached $3.54
billion, according to the data on TradingView. This highlights a significant
activity from traders betting on further gains.

XRP has now surpassed some of its rivals, including Solana. It is the fourth-largest digital asset behind Bitcoin, Ethereum, and
Tether. Another important fundamental analysis of Ripple is
its upcoming RLUSD stablecoin, which is currently awaiting regulatory approval. The
stablecoin aims to enhance XRP’s role in cross-border transactions. This factor
could also push the price higher.

This article was written by Jared Kirui at www.financemagnates.com.