- Ripple XRP in a steady downtrend as a legal battle ensues with the SEC
- Exchanges delist XRP due to concern for the outcome of the Ripple SEC lawsuit
- XRP may deteriorate if the delisting trend continues
While the broader cryptocurrency market enjoys a bullish rally, Ripple (XRP) seems to in a steady decay as price falls further each passing day. The cryptocurrency was enjoying high bullish sentiment before the announcement of the Ripple SEC lawsuit.
The Ripple SEC lawsuit
On December 22, the US Securities and Exchange Commission filed suit against Ripple, the parent company behind XRP. The watchdog claims that Ripple has raised $1.3 billion via unregistered security sales since 2013. The SEC alleges that the company continues its illegal distribution of securities when it unlocks a fraction of its XRP holdings in its escrow wallet.
The SEC alleges that the company uses the token sale to control the price of its XRP token sale, similar to a central bank.
Ripple, on the other hand, denies the allegations, but while the company presents its case, many exchanges and financial institutions are abandoning the XRP token ceasing its trading and delisting the asset from their platform.
Cryptocurrency exchanges are worried that if SEC wins the Ripple SEC lawsuit, the agency may come after institutions facilitating the distribution of XRP. Up to now, multiple cryptocurrency exchanges have announced ceasing XRP trading and delisting the asset.
These include OSL, and CrossTower, while Bitstamp revealed that it would stop XRP trading on January 8. Similarly, cryptocurrency hedge fund Bitwise has also removed XRP from its portfolio.
While the other two exchanges are small-scale firms, Bitstamp is a major crypto trading platform boasting a daily trade volume of upwards of $500 million. As such, Bitstamp’s recent announcement is bound to have an impact on XRP’s price.
Impact on XRP price
Prior to the announcement, the XRP price was holding above the $0.450 level showing signs of a bullish reversal. However, promptly after the announcement of the Ripple SEC lawsuit, the price fell below the $0.450 mark entering a descending channel that would send XRP price crashing towards the $0.250 support level.
The price stabilized at the level before recovering to the $0.350 level showing potential for further upwards movement. However, the price could only climb to $0.380 before falling back. The negative movement coincides with Bitstamp tweeting its decision to cease XRP trading.
The price fell to the support level at $0.300 and has been unable to leave the mark since then. If exchanges and institutions continue abandoning Ripple, XRP may yet see another sharp decline in its price.
Currently, across the technical indicators, the MACD suggests a bullish reversal, while the RSI shows potential in either direction. Similarly, the Bollinger Bands are currently in a squeeze suggesting that XRP price will observe an increase in volatility in the next few days.
While I would love to suggest a fast recovery to the $0.450 level, the uncertain outcome of the Ripple SEC lawsuit makes it hard to determine the future of XRP. Traders should expect the price to hover at the current level as people watch from the sidelines.
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