Ripple’s XRP Faces Price Dip Amidst Promising Blockchain Developments
XRP, Ripple’s native token, is experiencing a price correction, currently trading around $3.29 in the American session. This downturn follows a rejection at a recent high, just shy of its all-time peak of $3.66 reached last Friday.
Technical Indicators Suggest Short-Term Bearish Trend
Technical analysis indicates a potential shift towards a bearish outlook for XRP in the short term. This is supported by a decrease in Open Interest (OI) for futures contracts, coupled with a decline in the Relative Strength Index (RSI).
Brazilian Firm VERT Leverages XRP Ledger for Tokenized Credit
VERT, a prominent Brazilian provider of securitization and fund management services, has launched a blockchain-based platform to manage private credit on the XRP Ledger (XRPL).
According to an announcement, the platform is designed to digitally mirror securitization and fund operations, with on-chain records of key events and transactions.
VERT aims to foster efficient, transparent, and accessible capital markets in Brazil, backed by a secure digital infrastructure.
First Transaction: A $130 Million Agricultural Receivable Certificate
The platform has already executed its first successful transaction, involving the issuance of an Agricultural Receivables Certificate (CRA) valued at approximately $130 million.
CRAs are regulated financial instruments used in Brazil to pool future cash flows for investment products, commonly used to finance agricultural products and exports.
XRPL’s Benefits: Security, Transparency, and Efficiency
Issuing CRAs on-chain enhances security, transparency, traceability, and efficiency, leveraging the XRPL’s regulatory compliance features, including low-cost transactions. This adoption extends to the recently launched EVM sidechain of XRPL, supporting an Ethereum-compatible environment with smart contracts for automation and reporting.
Gabriel Braga, Director of Digital Assets at VERT, stated:
“We are enabling operational events to be recorded in the most granular way possible, ensuring traceability and transparency with event records closer to the moment they occur, approaching real-time.”
Ripple is focusing on supporting the tokenization of real-world assets (RWAs) by leveraging the XRPL’s EVM sidechain, recently launched on the mainnet.
Derivatives Market Shows Decreased Interest in XRP
Interest in XRP in the derivatives market is waning after a surge in Open Interest (OI) of futures to $10.94 billion, the highest level this year.
Data indicates a slight decrease in interest, with the OI averaging $10.79 billion. The price drop has also led to increased liquidations, reaching $29 million in the last 24 hours.
Long positions accounted for the majority of liquidations, with approximately $26 million, while $2.8 million in short positions were cleared.
Technical Outlook: XRP Price Declines as RSI Falls
XRP is trading at $3.29 after losing support at $3.40, its previous high. The decline in the Relative Strength Index (RSI) from extremely overbought conditions at 88 to 68 supports the shift in market dynamics, potentially due to profit-taking and overall sentiment in the cryptocurrency market.
A further decline in the RSI would indicate reduced buying pressure, potentially accelerating losses towards lower support levels at $3.20, tested in late January, and $3.00, previously tested as resistance in early March.
Traders should also monitor the Moving Average Convergence Divergence (MACD) indicator for further signs of weakness, particularly when the blue line crosses below the red signal line, which would likely result in a sell signal.
However, the bullish trend remains intact if buyers gather liquidity at the current level, keeping the potential for gains above the all-time high of $3.66 alive.
Ripple – Frequently Asked Questions
Is XRP a Security?
It depends on the transaction, according to a court ruling issued on July 14:
- For institutional investors or over-the-counter sales, XRP is a security.
- For retail investors who purchased the token through programmatic sales on exchanges, on-demand liquidity services, and other platforms, XRP is not a security.
What is the SEC’s Lawsuit Against Ripple About?
The U.S. 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 U.S. securities law and will have to continue litigating for the approximately $729 million it received under written contracts.
What are the Implications of the Court Ruling?
The ruling offers a partial victory for both Ripple and the SEC, depending on the perspective.
Ripple gains a significant win on the fact that programmatic sales are not considered securities, which could bode well for the cryptocurrency sector in general, as most assets under the SEC’s scrutiny are managed by decentralized entities that sold their tokens primarily to retail investors through exchange platforms, experts say.
Still, the ruling does not greatly help 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 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.
How Does This Affect the SEC’s Approach to Crypto Regulation?
The SEC has intensified its enforcement actions towards the blockchain and digital asset industry, filing charges against platforms like Coinbase or Binance for alleged violations of U.S. Securities Law. The SEC claims that most crypto assets are Securities and are therefore subject to strict regulation.
While defendants may use parts of the Ripple ruling to their advantage, the SEC may also find reasons in it to maintain its current strategy of regulation through enforcement.
What’s Next for Ripple and the SEC?
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 sooner. The case is in a pre-trial phase, in which both Ripple and the SEC still have the possibility of reaching a settlement.
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