XRP Faces Risk of Sub-$0.3750 on Fed Fear and SEC v Ripple Silence

Key Insights:

• On Saturday, XRP rose by 0.40% to end the day at $0.38372.
• There were no updates from the SEC v Ripple case to influence, leaving the broader crypto market to deliver XRP price support.
• The technical indicators are bearish, with XRP sitting below the 200-day EMA, signaling a return to sub-$0.37.

On Saturday, XRP rose by 0.40%. Following a 0.14% gain on Friday, XRP ended the day at $0.38372. XRP avoided sub-$0.38 for the first time in three sessions.

Range-bound throughout the Saturday session, XRP fell to a late afternoon low of $0.38000 before finding support. Steering clear of the First Major Support Level (S1) at $0.3774, XRP rose to a late high of $0.38407. However, coming up short of the First Major Resistance Level (R1) at $0.3873, XRP eased back to end the day at $0.38372.

Regulatory Risk and Fed Fear Keep XRP at Sub-$0.40 Levels

While the SEC v Ripple case remains the focal point, the pickup in regulatory activity and shift in sentiment toward Fed monetary policy will also influence.

Further SEC action against US crypto exchanges and the threat of a US ban on crypto staking will test buyer appetite.

With the US CPI Report out on Tuesday, Fed Fear will also pressure XRP and the broader crypto market. Following the US Jobs Report and hawkish Fed chatter in the week, a pickup in inflationary pressure would support interest rates beyond 5% and a higher for longer policy to tackle inflation.

Amicus Curiae Attorney John Deaton Talks Zakinov v Ripple

On Saturday, there were no updates from the ongoing SEC v Ripple case to influence investor sentiment. However, Amicus Curiae attorney John Deaton shared his views on the Zakinov v Ripple case in California after filing a Motion to File an Amicus Brief.

Deaton stated,

“I point out the class I have is 75,980 while he has 6. Regardless, I tell the judge his case should be limited to sales offered directly by Ripple and shouldn’t include secondary sales around the world including in foreign lands where those regulators say XRP is not a security.”

Deaton added,

“On top of everything, the Lead Plaintiff in the class action case is a day trader who bought, owned, and sold XRP, all within two weeks, FIVE YEARS AGO. He said when he bought XRP, he was relying on the efforts of Ripple because they promised to get financial institutions to use XRP.”

By way of background, the plaintiffs claim that Ripple sold XRP as an unregistered security and are asking the Court to certify a class of all XRP holders who purchased and now hold XRP or sold XRP at a loss.

The issue with the claim is that the proposed class would include 75,890 XRP holders who disagree with the small number of plaintiffs. Additionally, some XRP holders reside in countries that have already determined that XRP is not a security.

While the case is unconnected to the SEC v Ripple case, a ruling in favor of the Plaintiff would make things interesting.

Empower Oversight Balances the Scales by Targeting the SEC

As always, there are two sides to every case. On the other side, Empower Oversight is also in battle against the SEC. Empower Oversight is a non-profit government watchdog. In late 2021, Empower Oversight filed a lawsuit against the SEC, alleging that former SEC officials were biased against Ripple Lab and XRP.

William Hinman is a central figure in the case. Empower Oversight claims that William Hinman received millions of dollars from his former employer while helping guide the SEC’s regulation of cryptocurrencies. Hinman was a former employer of Simpson Thacher, which is part of a group that promotes Enterprise Ethereum. Hinman returned to Simpson Thacher after leaving the SEC.

Conflict of interest remains a focal point for the Defendants in the SEC v Ripple case. The SEC made at least six attempts to shield the William Hinman speech-related documents under attorney-client privilege before filing a motion to redact content from the speech-related documents.

As background, former SEC Director of the Division of Corporation Finance William Hinman said that Bitcoin (BTC) and Ethereum (ETH) are not securities.

Speaking from Davos in January, 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.”

The Day Ahead

Investors need to monitor the crypto wires for updates on the various cases, including or related to Ripple and XRP. The Zakinov v Ripple case should make little progress since a minority cannot represent the majority.

Empower Oversight could give the SEC sleepless nights, however. Conflict of interest is a material consideration for the Courts.

However, a lack of updates will leave XRP in the hands of the broader crypto market. SEC and US lawmaker chatter needs monitoring. FTX, Genesis, and Silvergate Bank updates also need considering, however.

XRP Price Action

At the time of writing, XRP was down 0.19% to $0.38301. A mixed start to the day saw XRP rise to an early high of $0.38363 before falling to a low of $0.38260.

Technical Indicators

XRP needs to avoid a fall through the $0.3865 pivot to target the First Major Resistance Level (R1) at $0.3852. A move through the Saturday high of $0.38407 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 $0.3867 and resistance at $0.39. The Third Major Resistance Level (R3) sits at $0.3907.

A fall through the pivot would bring the First Major Support Level (S1) at $0.3811 into play. However, barring an extended broad-based crypto sell-off, XRP should avoid sub-$0.3750 levels. The Second Major Support Level (S2) at $0.3785 should limit the downside. The Third Major Support Level (S3) sits at $0.3745.

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 $0.39308. 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 ($0.39333) through the 200-day EMA ($0.39308) would support a slide through S1 ($0.3811) to bring S2 ($0.3785) into view. However, a move through R1 ($0.3852) would give the bulls a run at R2 ($0.3867). A move through the 50-day EMA would send a bullish signal.