XRP Eyes Breakout Amid Legal Developments

The ongoing price consolidation of Ripple (XRP) within the triangle suggests that the cryptocurrency is at a pivotal moment. Although XRP’s price recently failed to break above a key resistance level in August, there are signs of a possible breakout as the price compresses within a long-term pattern. This article updates the previous discussion on XRP, noting that the August candle failed to break the long-term consolidation. Despite the prolonged price fluctuations, XRP is showing signs of strength.

Technical Performance of XRP

The monthly chart discussed in the previous article shows that August 2024 failed to close above $0.65 and produced an inside-month candle for August, indicating that XRP is likely to remain in a sideways range for some time. The price is congesting within this long-term triangle and approaching the apex, which suggests that XRP may soon confirm a bottom. The consolidation within this range indicates that the prices are compressing and building strength, and once a breakout is confirmed, it could move quickly. It is observed that all the peaks within this triangle in 2018, 2021, and 2023 were reversed with sharp shadows on the candles, suggesting that if a breakout occurs from this region, the next leg higher might be stronger and could exceed the 2023 peak. The bullish hammer for July is still valid as the price is consolidating in a range-bound manner.

The above discussion is validated by the weekly chart below which shows the price compression, clearly indicating prices within a congestion zone. Since August failed to break above $0.65, this level has now become the pivot for the next strong rally in XRP. The sharp drop from $0.64 has already reversed higher. Despite the weak pattern, this consolidation appears very strong. The green line on the chart below further strengthens the bullish case. The chart shows that the price movement in August has not broken out of the triangle but suggests a bullish scenario for the next move to higher levels. The strong buy signals from 2020 and 2022, as indicated by the overbought RSI, suggest the continuation of a strong rally to higher levels.

To monitor the short-term movement in XRP, the daily chart below shows intense consolidation patterns. The rebound in August that hit the resistance at $0.65 was also reversed by over 50%, and the price is now consolidating within a wide range. This indicates that, in the short term, there is no clear direction, and XRP is likely to remain within this consolidation for short time.

However, the 4-hour chart shows that a drop in XRP to $0.40 might be followed by a rebound towards the pivotal level again, as seen in the chart below.

Recent Catalyst in Ripple’s Legal Battle

Based on the discussion above, XRP price is on the verge of a significant breakout. This potential is underscored by recent developments in its legal battle with the U.S. SEC. These events mark a pivotal moment for the cryptocurrency and its broader market. Judge Torres ruled that Ripple must pay a $125 million fine for violating securities laws. This amount is much lower than the previous fines sought by the SEC. Many in the industry see this as a partial victory for Ripple, suggesting a potentially positive turning point for the company. If Ripple and the SEC reach a final settlement soon, it may reinforce investor confidence. This could potentially drive up the value of XRP. The impact would be even stronger if the settlement included clear guidelines for the future regulatory treatment of XRP and similar digital assets.

However, the situation is still uncertain because the SEC can appeal the ruling until early October. This creates uncertainty that could impact market sentiment. If the SEC appeals, it might slow down any positive momentum XRP has gained. But if both sides agree to a full settlement, it could lift a lot of the regulatory pressure on XRP’s price. This settlement could also bring more clear rules for the cryptocurrency market, which might encourage more institutional investment in digital assets like XRP.

The chart below shows the recent volatility in XRP, which has resulted in an 80% loss from its peak of $3.29. It is interesting to note that a rebound in 2021, after the COVID-19 crisis, took XRP to higher levels, but it was still down 40% from its record peak. This suggests that a breakout from the current triangle pattern has potential to trigger a rally to recover more than 40% of the losses from the record high. This calculation suggests a potential XRP price of $2 if a breakout occurs from this region.

Moreover, speculative reports suggest that Ripple has already paid the fine or is close to settling. This has created excitement within the XRP community. Although these rumors are unconfirmed, they show the high anticipation and speculation common in the crypto space around major legal events. These rumors typically create a bubble in the market, driving prices to higher levels before eventually reversing lower. Overall, the outcome of Ripple’s legal battle with the SEC will likely have a big impact on XRP’s market. It will influence investor sentiment and could change its price movements in the near to medium term.

Bottom Line

In conclusion, XRP is at a critical juncture both technically and fundamentally. The technical analysis suggests that the cryptocurrency is consolidating within a significant long-term triangle, with potential for a breakout that could drive prices higher. At the same time, Ripple’s ongoing legal battle with the SEC adds a layer of uncertainty but also a potential catalyst for change. A final settlement or favorable legal outcome could provide much-needed regulatory clarity, boosting investor confidence and potentially driving a strong rally in XRP. However, the situation remains fluid, and market participants should remain cautious as the legal proceedings unfold. Overall, XRP’s future price movements will likely depend on both the technical patterns developing on the charts and the resolution of its legal challenges.

Despite this short term uncertainty, XRP is trading at lower levels and offers a long-term investment opportunity. Investors can consider adding positions at current levels, as XRP is likely to initiate a strong surge if it breaks above $0.65.