Ripple price is set for a rally as on-chain data shows a positive bias
|- Ripple price finds support around its 200-day EMA, impending rally on the horizon.
- On-chain data shows that XRP's open interest is rising, and long-to-short ratio is above one, signaling a bullish trend ahead.
- A daily candlestick close below $0.544 would invalidate the bullish thesis.
Ripple (XRP) retested its 200-day Exponential Moving Average (EMA) and rose 6.7% on Monday. During Asian trading hours, it trades slightly higher by 1.2% at $0.606 on Tuesday.
Onchain data shows that XRP's open interest is rising, and long-to-short ratio is above one, signaling a bullish trend on the horizon.
Ripple price is set for a rally following retest of key support level
Ripple price retested its 200-day Exponential Moving Average (EMA) at around $0.545 over the past few days and bounced 6.7% on Monday. This 200-day EMA roughly coincides with daily support at $0.544, making this area a key support level. At the time of writing on Monday, it trades slightly higher by 1.2% at $0.606.
If the 200-day EMA, at $0.545, holds as support, XRP could rally 6.5% from its current trading level at $0.606 to retest its daily support level at $0.643.
The Relative Strength Index (RSI) on the daily chart has flipped over its neutral level of 50, and the Awesome Oscillator (AO) is about to trade over its neutral level of zero. For bullish momentum to sustain, the indicators must trade above their neutral levels for the ongoing rally.
If the bulls are aggressive and the overall crypto market outlook is positive, XRP closes above $0.643; it could extend an additional rally by 13% to retest its next daily resistance at $0.724.
XRP/USDT daily chart
Data from CoinGlass shows that the futures' Open Interest (OI) in Ripple at exchanges is also increasing. The OI indicates the total number of outstanding derivative contracts that have not been settled (offset by delivery) and whether money flows into the contract are increasing or decreasing.
Increasing OI represents new or additional money entering the market and new buying, which suggests a bullish trend. When OI decreases, it is usually a sign that the market is liquidating, more investors are leaving, and the current price trend is ending.
The graph below shows that XRP's OI increased from $610.95 million on Sunday to $693.44 million on Tuesday, indicating that new or additional money is entering the market and new buying is occurring.
XRP Open Interest chart
Additionally, according to Coinglass's data, XRP's long-to-short ratio is 1.42. This ratio reflects bullish sentiment in the market, as the number, above one, suggests that more trades anticipate the price of the asset to rise, bolstering Ripple's bullish outlook.
XRP Long to short ratio
Despite the bullish thesis signaled by both on-chain data and technical analysis, the outlook will shift to bearish if Ripple's daily candlestick closes below the $0.544 daily support. This scenario could lead to a 9.6% decline to retest its low of $0.492 on August 7.
SEC vs Ripple lawsuit FAQs
It depends on the transaction, according to a court ruling released on July 14: For institutional investors or over-the-counter sales, XRP is a security. For retail investors who bought the token via programmatic sales on exchanges, on-demand liquidity services and other platforms, XRP is not a security.
The United States Securities & Exchange Commission (SEC) accused Ripple and its executives of raising more than $1.3 billion through an unregistered asset offering of the XRP token. While the judge ruled that programmatic sales aren’t considered securities, sales of XRP tokens to institutional investors are indeed investment contracts. In this last case, Ripple did breach the US securities law and will need to keep litigating over the around $729 million it received under written contracts.
The ruling offers a partial win for both Ripple and the SEC, depending on what one looks at. Ripple gets a big win over the fact that programmatic sales aren’t considered securities, and this could bode well for the broader crypto sector as most of the assets eyed by the SEC’s crackdown are handled by decentralized entities that sold their tokens mostly to retail investors via exchange platforms, experts say. Still, the ruling doesn’t help much to answer the key question of what makes a digital asset a security, so it isn’t clear yet if this lawsuit will set precedent for other open cases that affect dozens of digital assets. Topics such as which is the right degree of decentralization to avoid the “security” label or where to draw the line between institutional and programmatic sales are likely to persist.
The SEC has stepped up its enforcement actions toward the blockchain and digital assets industry, filing charges against platforms such as Coinbase or Binance for allegedly violating the US Securities law. The SEC claims that the majority of crypto assets are securities and thus subject to strict regulation. While defendants can use parts of Ripple’s ruling in their favor, the SEC can also find reasons in it to keep its current strategy of regulation by enforcement.
The court decision is a partial summary judgment. The ruling can be appealed once a final judgment is issued or if the judge allows it before then. The case is in a pretrial phase, in which both Ripple and the SEC still have the chance to settle.
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