Ripple was among the biggest losers this week as its native cryptocurrency XRP fell about 13 percent.
XRP / USD fell to $ 0.44 during the early European session. Its downward movement was based on two principles. The first was a broader corrective trend in the cryptocurrency market, where other top coins, including Bitcoin and Ethereum, saw a similar downward trend.
The second foundation was Ripple’s potential to face a potential US Securities and Exchange Commission lawsuit over its XRP sales. Traders took the news as their cue to run down their XRP holdings while correcting down from the annual high of $ 0.79.
The Ripple token crashes after the SEC news hits the wire. Source: XRPUSD on TradingView.com Ripple token crashes after SEC news hit the line. Source: XRPUSD on TradingView.com
“When the news got out, Ripple expected to be sued by the SEC for social volume XRP understandably exploded for CryptoIt’s number 3 in market capitalization, ”noted data analytics firm Santment. “There was also an increase in tokens moved on exchanges as prices dropped -17% on the last day.”
Ripple inflows on the exchanges picked up pace after SEC news. Source: Santiment Ripple inflows into exchanges picked up pace after SEC news. Source: Santiment
The SEC lawsuit revolves around whether Ripple Labs committed an illegal act in selling its XRP token in 2017 to raise funds for its blockchain platform, a move that would view the entire event as a securities sale.
Ripple currently directly holds $ 6.4 billion in XRP. The San Francisco company also has an escrow account of 48 billion more XRPs that it regularly sells to the public.
XRP still bullish?
XRP now forms a bull flag. Traders interpret it as a bullish continuation pattern that occurs a brief pause after a sharp rise in price. The pattern looks like a downward sloping channel / rectangle, confirmed by two parallel trend lines against the previous trend.
Ripple’s bull flag formation in the game. Source: XRPUSD on TradingView.com Ripple’s bull flag formation in-game. Source: XRPUSD on TradingView.com
XRP / USD should technically try to break above the flag’s upper trendline in order to continue its uptrend. Should such a movement occur, the pair could grow by the height of the flagpole that formed in front of the flag itself. Its height is 0.27, which brings XRP / USD to at least 0.8 USD in the coming sessions.
If the price declines more than 50 percent from its flag-top in the meantime, it could invalidate the entire bullish continuation theory.
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