Source: PaxForex Premium Analytics Portal, Fundamental Insight
Optimism about a favorable outcome in the SEC lawsuit against Ripple has pushed its native XRP/USD token to 2023 highs before retreating. One potential twist in the case came from an SEC expert, who confirmed that since mid-2018, price fluctuations in Bitcoin and Ethereum were responsible for up to 90% of price action in the XRP/USD. It suggests that Ripple allows the price of Bitcoin and Ethereum to dictate XRP/USD, which does not make it a security, as the SEC lawsuit claims, but closer to a price tracker of a basket of other digital assets.
Another fact noted by the SEC is that investors rely on efforts by Ripple to succeed, but not commercially but solely on winning the lawsuit. The SEC suggests that investors have little faith in the success or viability of Ripple but only bet on a favorable ruling for Ripple. One potential outcome some XRP/USD holders anticipate is a split ruling where the judge classifies the pre-2018 sales as unregistered securities, resulting in a fine against Ripple but allowing it to resume operations while classifying the post-2018 sales as digital assets and not securities.
Ripple lawyers continue their efforts to get a speech by Former Director of the Securities and Exchange Commission’s Division of Corporation Finance, William Hinman, unsealed. In the controversial speech, Hinman referred to Bitcoin and Ethereum as securities. The outcome of the lawsuit will have tremendous effects across the cryptocurrency industry, but it appears that a pro-Ripple ruling is possible.
The forecast for the XRP/USD remains cautiously bullish after price action has retreated from fresh 2023 highs, forming a bullish flag formation, which is a continuation pattern. Adding to the upside pressure is the narrow but ascending Ichimoku Kinko Hyo Cloud and the upward-moving Tenkan-sen. Volatility could increase as bulls and bears fight for directional control at a key support/resistance level, and the flat Kijun-sen confirms a pending standoff. Traders should also monitor the CCI after it surged to a multi-month high, followed by a breakdown below extreme overbought territory. This technical indicator has lost downward momentum and could use the zero level as support for a renewed push higher. It may temporarily move below zero, and a breakout would provide the final buy signal for traders. Can bulls regain complete control over the XRP/USD and push price action into its horizontal resistance area and a potentially new 2023 high? 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 0.4810 to 0.5110 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 0.5000
- Take Profit Zone: 0.5535 – 0.5810
- Stop Loss Level: 0.4710
Should price action for the XRP/USD breakdown below 0.4810, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 0.4710
- Take Profit Zone: 0.4185 – 0.4330
- Stop Loss Level: 0.4810
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