SEC, Middle East Force XRP Price Down To One-Month Low — Rebound Next?

XRP (XRP) plummeted by approximately 12.75% in the last 24 hours, reaching a one-month low of $0.511 on Oct. 3. Traders started selling their XRP holdings after the United States Securities and Exchange Commission’s (SEC) appeal in its lawsuit against Ripple and due to escalating tensions in the Middle East.

SEC’s Appeal Against Ripple’s Partial Court Win Hurts XRP

On Oct. 2, the SEC filed a notice of appeal challenging Judge Analisa Torres’ 2023 ruling that secondary sales of XRP were not securities transactions. In other words, XRP did not meet the criteria for classification as a security under the Howey test.

Many legal experts had expected the SEC to appeal, viewing Judge Torres’ ruling as a potential breakthrough for Ripple. However, the SEC’s recent action has rekindled uncertainty in the market.

Since the appeal was filed, XRP’s price has dropped 16%, wiping out its September gains. Traders are pulling back, concerned that a higher court could reverse the decision and reclassify XRP as a security.

Middle East Tensions Add to XRP’s Sell-Off

Escalating tensions in the Middle East have sparked a broader sell-off across global markets, adding to the downside pressure on XRP.

Following Israel’s airstrikes on Beirut and speculation of further retaliation against Iran, investor risk appetite has decreased significantly. This shift has pushed traders toward safe-haven assets such as the U.S. dollar and government bonds.

European stocks followed the same risk-off trend, with the Stoxx Europe 600 index dropping by 0.8%. In the U.S., equity futures pointed to a weaker open, reflecting a similar retreat in investor sentiment.

The U.S. dollar index (DXY), often considered a haven, climbed to a one-month high amid the flight to safety. This is interestingly opposite to XRP, which reached a month-low alongside it.

A Solid XRP Price Recovery May Follow

Despite the recent sell-off, XRP’s price remains within a broader ascending channel. The cryptocurrency has consistently bounced between two parallel trendlines, with the upper boundary acting as resistance between $0.65-$0.69 and the lower boundary providing support near $0.50-$0.52.

Recent rejections from the upper trendline, which aligns with the 0.786 Fibonacci retracement level at $0.6542, have contributed to XRP’s downward move. However, the current price level around $0.5165 also coincides with the 0.618 Fibonacci retracement level, which has historically attracted buyers.

If this support holds, XRP could potentially bounce back and retest the upper resistance around $0.65 by mid-October. Conversely, a breakdown below this support zone could trigger further declines, with the next potential target at $0.4639, corresponding to the 0.236 Fibonacci retracement level.