XRP’s Recovery Stalls Amidst Market Uncertainty

XRP’s recent recovery is losing momentum, facing resistance around $2.24. This stall reflects both aggressive bearish risks and ongoing geopolitical uncertainty. The broader cryptocurrency market is consolidating, adding to the pressure on XRP.

• XRP’s recovery is losing steam, facing resistance at $2.24 due to bearish pressures and geopolitical concerns.
• XRP Ledger activity has plummeted, with active addresses dropping sharply to 100,000.
• Open interest in XRP futures is up slightly to $4 billion, but remains in a downtrend from mid-May’s peak of $5.52 billion.

Currently trading around $2.20, XRP has fallen nearly 1.5% recently. This decline from a recent high of $2.34 coincides with a significant drop in network activity. The number of active addresses on the XRP Ledger has plunged 84% in just three days, settling at 100,000.

XRP Shows Resilience Despite Network Activity Dip

Bearish pressures are keeping XRP’s price range-bound, between the key support level around $2.09 and resistance at $2.34. Geopolitical tensions, particularly the conflict between Israel and Iran, contribute to this sluggish price action. The decline in activity on the XRP Ledger (XRPL) also plays a role.

Data from Santiment reveals a sharp decline in active addresses. After peaking at 609,000, the number of active addresses fell to 100,000 recently, an 84% decrease.

Network activity metrics track the performance of the XRP Ledger by monitoring active addresses that interact with the protocol. This significant drop suggests a decrease in interest in XRP, potentially reducing demand.

If this downtrend continues, mirroring the low activity seen between early April and June, it could challenge XRP’s ability to sustain an uptrend and target higher levels beyond $3.00.

Key fundamental indicators, such as open interest (OI) in the futures market, also suggest a lack of strong conviction in XRP. CoinGlass data shows a slight increase in OI to $4 billion. However, the overall trend has been downward since the peak of $5.52 billion in mid-May.

This persistent downtrend in OI, representing the value of active futures and options contracts, aligns with a bearish bias. Liquidations of long positions ($4.21 million) have outpaced short positions ($739,000) recently.

Despite this, trading volume in the derivatives market has surged over 200% to $9.8 billion. This increase suggests heightened demand for XRP as traders hedge their positions amidst geopolitical uncertainty.

Price action is expected to remain relatively contained ahead of the Federal Reserve (Fed) meeting. Analysts at K33 Research call the event “the focal macro event of the week, with traders closely watching the updated dot plot for clues on rate paths.”

The report suggests that recent inflation data and geopolitical conflicts might encourage a dovish outlook from the Fed. However, potential fiscal expansion through a multi-trillion-dollar budget bill could push policymakers towards a more hawkish stance.

Technical Outlook: XRP in Downtrend

XRP’s price is generally trending within a descending channel, extending the decline from the May peak of $2.65. A recent attempt to break out of the upper trendline resistance failed, highlighting the strong resistance around $2.24. The 50-day and 100-day Exponential Moving Averages (EMAs) converge at this level, creating a significant hurdle.

A break above this resistance could shift the market dynamics for XRP, potentially paving the way for a swing high targeting $2.65 and $3.00 levels.

The Relative Strength Index (RSI) continues to show bearish momentum, trending downward below a descending trendline since mid-May. Bears could tighten their grip on XRP if the RSI moves further into oversold territory.

Key areas of interest include the 200-day EMA support at $2.09, which was tested recently, and the area around $2.00. Below these levels, further losses could lead to the April low of $1.61, reached during a market-wide sell-off.

Ripple FAQs

Is XRP a security?

It depends on the transaction, according to a court ruling:
For institutional investors or over-the-counter sales, XRP is a security.
For retail investors who bought the token through programmatic sales on exchanges, demand liquidity services, and other platforms, XRP is not a security.

Why did the SEC sue Ripple?

The Securities and Exchange Commission (SEC) accused Ripple and its executives of raising over $1.3 billion through an unregistered asset offering of the XRP token.
Although the judge ruled that programmatic sales are not considered securities, sales of XRP tokens to institutional investors are investment contracts. In the latter case, Ripple did violate US securities law and will have to continue litigating for the approximately $729 million it received under written contracts.

Who won the Ripple vs SEC case?

The ruling offers a partial victory for both Ripple and the SEC, depending on what you look at.
Ripple gets a big win over the fact that programmatic sales are not considered securities, and this could bode well for the cryptocurrency sector in general, as most of the assets in the SEC’s sights are handled by decentralized entities that sold their tokens mainly to retail investors through exchange platforms, experts say.
Still, the ruling does little to answer the key question of what makes a digital asset a security, so it is still unclear whether this lawsuit will set a precedent for other open cases affecting dozens of digital assets. Issues such as what is the appropriate degree of decentralization to avoid the “security” label or where to draw the dividing line between institutional and programmatic sales are likely to persist.

What does the Ripple ruling mean for the SEC?

The SEC has stepped up its enforcement actions towards the blockchain and digital asset industry, filing charges against platforms such as Coinbase or Binance for alleged violation of US Securities Law. The SEC claims that most crypto assets are Securities and are therefore subject to strict regulation.
While defendants can use parts of the Ripple ruling to their advantage, the SEC may also find in it reasons to maintain its current strategy of regulation through enforcement.

Can the Ripple ruling be appealed?

The court ruling is a partial summary judgment. The ruling can be appealed once a final judgment is issued or if the judge allows it before. The case is in a pre-trial phase, in which both Ripple and the SEC still have the possibility of reaching an agreement.

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