The cryptocurrency industry is currently in terrible shape. The value of cryptocurrencies is cascading, and there are no indications of a bullish reversal soon. Bitcoin’s price currently sits at $19,011.05, an over 71% drop from its all-time high of $67,566.83, according to CoinMarketCap.
Historically, a slight change in Bitcoin’s price has always caused a significant ripple effect in altcoin prices. And following 2022’s historic crypto crash, one would expect that all altcoins would lay low and struggle against the force of free fall. However, XRP has proven to be an exception to this hypothesis. Shockingly, XRP’s price does not seem to be laying low or even struggling, defiling all fundamental and technical analyses.
Amid poor market conditions, buyers have shown great strength, with XRP’s price rising to as high as 63% in the past week. Although there has been a slight retracement, XRP’s price is currently at $0.4952. The current price is a 42.04% increase from last week’s price and the highest weekly increase among the top 100 cryptocurrencies, according to CoinMarketCap.
Technical Analysis of XRP
In a YouTube live stream aired on the 22nd of September, crypto influencer Crypto Banter showed a live chart of XRP. The cryptocurrency was seen to have broken out of the 0.4235 resistance, an 18-month market volume trendline, and a 22-month RSI trend. On the 4-year timeframe, XRP is also seen to have an over 80% growth over Bitcoin and Ethereum. These breakouts on a large timeframe are an indication of a highly bullish move for XRP if it keeps its momentum.
A speculated cause of this sharp growth and a crucial determinant in the future of XRP is the current court case between its parent company, Ripple Labs, and the U.S. Securities and Exchange Commission (SEC). Both parties have filed for a summary hearing, and the public expects XRP to win this case, resulting in a stronger rise to the upside.
Ripple Labs’ Suit with the SEC
XRP was created by Ripple Labs in 2012 and has been trading on many crypto exchanges since then. However, the United States Securities and Exchange Commission (SEC) pulled a shocker on the company when it filed a lawsuit against them in 2020. The lawsuit accused Ripple Labs of selling unregistered securities worth billions of dollars.
But why XRP from all the top-performing cryptocurrencies in the industry?
Ripple Labs was established and registered in America, giving the SEC the right to file a claim and take legal action against the company. The founding companies of other cryptocurrencies like Bitcoin and Solana were not registered in America within puts them outside the scope of the SEC’s jurisdiction.
But Ethereum is also an American company with an even bigger market capitalization than XRP. And if cryptocurrencies were regarded as unregistered securities, Ethereum would be a bigger fish in the SEC’s net than XRP. Ripple Labs threw this question at the SEC but has yet to get an answer addressing the situation. The company is also arguing that the SEC should not have any authority over XRP tokens as it has been sold through international exchanges.
To counter the latter argument, the SEC has argued that Ripple Labs selling XRP tokens in exchange for money qualifies it to be a security following the Howey test. Understandably, the tokens have been sold through various exchange platforms; however, the SEC opines that the Ripple Labs executives were aware that the tokens, according to the Howey test, are securities but deliberately refused to register them.
Impact of the SEC’s Filing on XRP’s Thriving
2020 was an excellent year for the cryptocurrency industry. The market was still recovering from a bearish trend when the lockdown increased its global adoption. People were scared of impending inflation and other problems that the lockdown would cause to the economy, consequently increasing Bitcoin’s price.
While other altcoins were having a field day because of the bullish trend, the Ripple ecosystem struggled to get a good day as the SEC’s lawsuit negatively affected XRP’s price. U.S cryptocurrency exchanges like Coinbase also removed XRP from their trading pairs during this time. The SEC lawsuit crashing XRP’s price had the worst effect on the investors, which was an irony because, in a bid to help, the SEC has succeeded in hurting these investors.
The Journey So Far
For almost two years, the SEC and Ripple Labs have severally appeared in the Southern District of New York’s U.S. Court to argue their cases. Having had enough of the back and forth, the SEC and Ripple Labs individually filed their motions for a summary judgment.
Core members of the Ripple team have publicly expressed their opinions on the matter. In a tweet, Stuart Alderoty, a general counsel at Ripple, asserted that the SEC is only making a noise as it does not have enough evidence to back the Howey test argument. Responding to him, the CEO of Ripple Labs, Brad Garlinghouse, tweeted that the SEC remake the law instead of applying it and giving themselves more power than Congress already conferred on them.
The cryptocurrency community received the news of the summary judgment with joy, and the immediate increase in XRP’s price is more than enough proof that the public is taking sides with Ripple Labs. Like a magnet, the news quickly pulled in buyers, and XRP broke its $0.40 and $0.45 resistance floor.
The Future of XRP
Analisa Torres, the ruling judge over the SEC and Ripple Labs’ case, will give her verdict soon. The result of this case will not only affect XRP’s price; it will also serve as a precedent for whether cryptocurrencies should be treated as securities and if the SEC is the appropriate agency to pursue such issues.
Although the public expects the judge to rule in favor of Ripple Labs, a decision which will cause an immediate outburst in XRP’s price, there is another feasible side to this coin. If Ripple Labs loses, it could be banned in the U.S., but this would not have much effect on the price.
However, suppose Ripple Labs loses, XRP can be banned entirely. In that case, there will be another ocean of tears for crypto investors as XRP’s price will rapidly fall below its all-time low and get delisted from crypto exchanges.
XRP’s current performance is impressive, but we could witness a more dramatic performance when the judge gives her verdict.