Source: PaxForex Premium Analytics Portal, Fundamental Insight
Cryptocurrencies experienced 50%+ corrections in 2022, including XRP, the digital token powering Ripple. Adding to selling pressure in the XRP is the ongoing lawsuit between the SEC and Ripple, where Ripple continues to win small victories. Most legal experts believe the digital payments company will prevail in court in 2023. It will remove the biggest obstacle for price action, making XRP a top asset to consider. The XRP/USD has more upside potential from present levels than downside risk unless the SEC manages a victory. Unknowns remain, which explains why many wait on the sidelines for the court to rule. It is the most sensible strategy to avoid a nasty surprise next year, as an SEC victory could plunge the token by 50%+ and cause long-term damage to the industry.
Following the collapse of cryptocurrency exchange FTX amid widespread fraud, regulators received the necessary ammunition to further their push into controlling the cryptocurrency sector. Effective regulation can provide a solid growth platform. The risk is that outdated rules and regulations will apply and hinder progress, especially in developed economies, with the SEC a prime example of how things can turn sour. The risk for cryptocurrencies is to the downside in 2023. The XRP/USD could provide a rare bright spot in what could result in volatile price action as inflation remains elevated, and the global economy experiences a recession.
Ripple has to defend itself out of court, with Ethereum co-founder Vitalik Buterin questioning the decentralization of XRP. Chief Technology Officer David Schwartz defended Ripple and XRP on Twitter. He noted that Buterin fails to understand the difference between Ripple, a company, and XRP, a digital asset used by Ripple. Many use both terms interchangeably, an incorrect and false interpretation of both. It confirms the lack of knowledge and education about the cryptocurrency sector and the need to advance both in 2023, which could be challenging and defining for the cryptocurrency sector, especially following the FTX collapse and pending reaction of regulators.
The forecast for the XRP/USD turned moderately bullish after this cryptocurrency pair bounced off the top range of its horizontal support area. Last week saw a gradual increase in price action, but volatility could increase with the Kijun-sen flat and the Tenkan-sen drifting moderately lower. The flat Senkou Span B and descending Senkou Span A of the Ichimoku Kinko Hyo Cloud confirm a potential choppy trading week to close out 2022. Traders should monitor the CCI after it has recorded a lower high in extreme oversold territory followed by a breakout. A move above zero could result in a sustained push higher. Can bulls solidify their gains and push the XRP/USD into its horizontal resistance area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the XRP/USD remain inside the or breakout above the 0.3245 to 0.3580 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 0.3450
- Take Profit Zone: 0.4180 – 0.4490
- Stop Loss Level: 0.3040
Should price action for the XRP/USD breakdown below 0.3245, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 0.3040
- Take Profit Zone: 0.2580 – 0.2860
- Stop Loss Level: 0.345
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