XRP at Risk of Sub-$0.3750 on US Inflation and Regulatory Scrutiny

Key Insights:

• On Thursday, XRP joined the broader crypto in the red, falling by 1.71% to end the day at $0.38832.
• Regulatory jitters overshadowed SEC v Ripple optimism, with the Fed, the SEC, and the IMF targeting the digital asset space.
• The technical indicators turned bearish, signaling a return to sub-$0.38.

On Thursday, XRP fell by 1.71%. Reversing a 0.94% gain from Wednesday, XRP ended the day at $0.38832. The bearish session left XRP at sub-$0.39 for the first time in four sessions.

A mixed start to the day saw XRP rise to a mid-morning high of $0.39751. Falling short of the First Major Resistance Level (R1) at $0.4006, XRP slid to a late low of $0.38557. XRP briefly fell through the First Major Support Level (S1) at $0.3866 before ending the session at $0.38832.

Hinman Documents Remain in the Spotlight

It was another busy session on Thursday, with the William Hinman speech-related documents receiving more airtime.

On Thursday, US government watchdog Empower Oversight voiced its support of Dr. Roslyn Layton and her Court filing to unseal the Hinman speech-related documents.

William Hinman remains a central figure in the SEC v Ripple case. Former SEC Director of the Division of Corporation Finance William Hinman said that Bitcoin (BTC) and Ethereum (ETH) are not securities.

The contentious issue with the speech relates to Hinman’s connection with Simpson Thacher. Simpson Thacher is part of a group that promotes Enterprise Ethereum. After leaving the SEC, Hinman returned to Simpson Thacher. Empower Oversight filed against the SEC in 2021.

The SEC v Ripple case has been in the spotlight. News of Dr. Roslyn Layton filing a Motion to Intervene petition for access to the Hinman speech-related documents returned investor focus to the Hinman documents.

Dr. Layton has written numerous articles about the Hinman Speech Documents, examining the central role those documents play in the case, which she has dubbed ‘the crypto trial of the century.’

While the SEC failed to prevent the documents from reaching the hands of the defendants, the SEC filed a motion to redact content from the speech. As a result, the public arena and XRP investors may never gain access to the Hinman documents. The SEC may prefer to settle rather than allow the Hinman documents to become public.

Ripple CEO Brad Garlinghouse shared his views on the speech-related documents, saying,

“When those come to light, I think you will see more kind of like, how is it possible for the SEC to decide to bring a case against Ripple given what they were saying within their own walls.”

Crypto Regulatory Scrutiny Overshadows Increased Hinman Focus

While the increased focus on the Hinman documents is positive, regulatory activity weighed on investor sentiment.

News of the SEC and the New York Department of Financial Services (NYDFS) objecting to the Binance.US acquisition of Voyager was bearish. Binance.US plans to acquire Voyager contributed to easing contagion risk at the end of 2022.

US Federal Reserve and IMF released crypto risk-related papers, adding to the bearish mood.

The Day Ahead

Investors should continue to chatter relating to the SEC v Ripple case. Binance, FTX, and Silvergate Bank updates will also draw interest.

However, we expect SEC activity and US lawmaker chatter to remain the key driver near term, barring a ruling from the Courts on the SEC v Ripple case.

In the afternoon session, US economic indicators will influence the NASDAQ and the crypto market. US inflation, personal income, and spending will be in focus. An unexpected pickup in US inflationary pressure would weigh on riskier assets.

XRP Price Action

At the time of writing, XRP was up 0.52% to $0.39033. A mixed start to the day saw XRP fall to an early low of $0.38775 before rising to a high of $0.39033.

Technical Indicators

XRP needs to move through the $0.3905 pivot to target the First Major Resistance Level (R1) at $0.3954 and the Thursday high of $0.39751. A return to $0.3950 would signal a bullish session. However, the broader crypto market and SEC v Ripple chatter would need to support a breakout.

In the case of an extended rally, XRP would likely test the Second Major Resistance Level (R2) at $0.4024 and resistance at $0.41. The Third Major Resistance Level (R3) sits at $0.4143.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.3834 in play. However, barring an extended broad-based crypto sell-off, XRP should avoid sub-$0.3750. The Second Major Support Level (S2) at $0.3785 should limit the downside. The Third Major Support Level (S3) sits at $0.3666.

The EMAs and the 4-hourly candlestick chart (below) sent a bearish signal.

At the time of writing, XRP sat below the 200-day EMA, currently at $0.39123. The 50-day EMA converged on the 200-day EMA, with the 100-day EMA narrowing to the 200-day EMA. The signals were bearish.

A bearish cross of the 50-day EMA through the 200-day would support a fall through S1 ($0.3834) to bring S2 ($0.3785) into play. However, an XRP move through the EMAs would give the bulls a run at R1 ($0.3954) and $0.40. A move through the 50-day EMA ($0.39150) would send a bullish signal.