XRP News Today: US Recession Fears Overshadow Settlement Hopes

XRP Drops Below $0.57 in Market Rout

On Friday, August 2, XRP slid by 6.13%. Following a 4.20% loss on Thursday, August 1, XRP ended the session at $0.5604. Significantly, XRP extended its losing streak to three sessions as the broader crypto market fell by 5.93% to a total market cap of $2.148 trillion.

US Labor Market Data Triggers Recession Fears

On Friday, August 2, the US Jobs Report intensified investor fears of a hard US landing, fueling a flight to safety.

The US unemployment rate unexpectedly jumped from 4.1% in June to 4.3% in July, the highest since October 2021. Deteriorating labor market conditions impacted wage growth, which increased by 3.6% year-on-year in July, down from 3.9% in June.

Weaker wage growth could reduce disposable income, curbing consumer spending. A pullback in consumer spending, with private consumption contributing over 60% to the US economy, may trigger a recession.

XRP saw heavy losses despite investor hopes of an SEC vs. Ripple settlement.

SEC Closed Meeting and Injunctions

On Thursday, August 1, the SEC scheduled a Closed Meeting for August 8. According to the Sunshine Act Notice, agenda items include,

• Institution and settlement of injunction actions;
• Institution and settlement of administrative proceedings;
• Resolution of litigation claims; and
• Other matters relating to examinations and enforcement proceedings.

The first item on the agenda may refer to the SEC vs. Ripple case. In March 2024, the SEC filed its remedies-related opening brief, asking for a $2 billion penalty and an injunction prohibiting Ripple from selling XRP to institutional investors.

The SEC argued that an injunction is appropriate because Ripple continued violating US securities laws post-complaint. An injunction could adversely affect Ripple’s US expansion plans and XRP demand.

Ripple Opposition Brief and Settlements

In April 2024, Ripple filed its remedies-related opposition brief, arguing that post-complaint activity was compliant with US securities laws, countering with a $10 million penalty proposal.

The opposition brief stated that post-complaint XRP sales were to accredited investors and via On-Demand Liquidity (ODL) agreements. Sales to accredited investors are exempt from US securities laws.

Moreover, Ripple explained that ODL agreements prevent profits or losses, and sales under ODL agreements cannot pass the Howey Test. The third prong of the Howey Test is the expectation of profits from the efforts of others.

A settlement may allow the SEC to save face with a substantially higher penalty than $10 million. Ripple could avoid the risk of an injunction. Additionally, a settlement would end SEC plans to appeal against the Programmatic Sales of XRP ruling.

Expert Opinions

Former SEC lawyer Marc Fagel recently commented on the chances of a settlement, stating,

“I mean, they’ve had about 150 of these nearly-weekly meetings since the case was filed, and Crypto Twitter was convinced a settlement was being discussed at every one of those meetings, but this is DEFINITELY the one! It is not the one.”

Pro-crypto lawyer Fred Rispoli predicted a court verdict by July 31. However, Judge Torres could delay a court verdict if both parties informed the court that settlement talks are ongoing.

Ripple CEO Brad Garlinghouse recently skirted a question about settlement talks with the SEC, saying he can’t talk about it.

Can XRP Retake the $1.00 Handle?

In July 2023, XRP rallied to a calendar year high of $0.9327 in response to the Programmatic Sales ruling. However, XRP dropped to an August low of $0.4367 over fears the SEC would overturn the ruling on appeal. A settlement could boost XRP demand and a return to the $1.00 handle.

Investors should remain alert amidst increasing speculation about a settlement. Stay updated with our latest news and analysis to manage exposures to XRP and the broader crypto market.

XRP Price Action

Daily Chart

XRP remained above the 50-day and 200-day EMAs, sending bullish price signals.

A break above the $0.5739 resistance level would support a move toward the $0.60 handle. Furthermore, a return to $0.60 could bring the July 31 high of $0.6591 and the $0.6609 resistance level into play.

SEC vs. Ripple case-related updates and SEC activity would require consideration.

Conversely, an XRP drop below the 50-day and 200-day EMAs could signal a fall toward the $0.50 handle.

With a 14-day RSI reading of 47.82, XRP could drop to the $0.50 handle before entering oversold territory.