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Ripple traders take losses over $75 million as XRP loses key support at $0.45

|ByEkta Mourya

  • Ripple traders took over $75 million in losses in July, per Santiment data. 
  • Ripple’s whales have distributed XRP at a loss in the past thirty days while retail investors accumulate the altcoin.
  • Ripple’s MVRV has dipped into the opportunity zone, where XRP price typically recovers. 
  • XRP dipped under key support at $0.4508, Ripple’s June 7 low.  

Ripple (XRP) price is under fresh selling pressure and tests key support at the June 7 low of $0.4508 on Thursday as whales are likely capitulating, according to on-chain data. Large wallet holders of XRP have distributed their holdings at a loss while small investors and retail traders accumulate.

The US Securities and Exchange Commission (SEC) vs. Ripple lawsuit has a new development. The payment remittance firm filed a letter of supplemental authority on Tuesday after Judge Amy Berman Jackson’s ruling in the Binance lawsuit cited Judge Analisa Torres’ ruling on XRP not meeting Howey’s requirements in secondary market sales. The SEC responded to the letter on Wednesday.

XRP price dipped under key support to a minimum of $0.4450 on Thursday. At the time of writing, XRP/USDT trades at $0.4570, losing more than 2% daily. 

Daily Digest Market Movers: New development in SEC lawsuit, whales exit positions

  • Ripple proponent attorney James Filan shared the letter of supplemental authority that Ripple filed in the lawsuit on Tuesday. The SEC responded to the letter on Wednesday. 
  • In its letter, Ripple refers to the recent decision in the SEC vs. Binance lawsuit and argues that the secondary market sales of the asset were not securities violations. Ripple, therefore, “does not reflect disregard for the law or warrant harsh remedies,” as requested by the SEC. 
  • The SEC responded to Ripple’s letter and argued that Ripple is extrapolating on one observation from a 90-page ruling. The SEC mentions its 2017 notice to the crypto industry that predates the sales of XRP tokens by the payment remittance firm. 
  • On-chain data shows that Ripple whales are consistently shedding their XRP holdings, distributing them as small wallet holders accumulate the recent price dip. Traders have realized over $75 million in losses in July. 
  • The Santiment supply distribution chart shows the change in holdings:

XRP supply distribution 

  • Another key metric is the Network Realized Profit/Loss (NPL), which measures all traders’ net profit/loss on a given day. The NPL metric shows negative spikes, meaning XRP holders have taken losses when distributing their holdings, typical of capitulation. 
  • Market Value to Realized Value (MVRV) metric is useful for identifying local tops and bottoms and upcoming reversals in an asset’s price. XRP’s 30-day MVRV has dipped to negative 4.42% on Thursday. According to this metric, XRP is currently undervalued and in the opportunity zone. 
  • On previous occasions when XRP’s MVRV touched this level, the asset’s price trend reversed, so the altcoin is likely primed for recovery. 

XRP NPL and MVRV (30-days)

Technical analysis: XRP tests key support, sell-off could push prices lower

Ripple’s prices tests key support at $0.4508, the June 7 low. The altcoin has been in a state of decline since March 11. In the recent market sell-off, while Ripple whales shed their holdings, retail traders accumulated. XRP has therefore likely resisted a mass sell-off. 

A sell-off could increase the pressure on XRP and push the altcoin to the April 13 low of $0.4188. 

On the other hand, if XRP recovers from the recent decline, it could make a comeback above the Fair Value Gap (FVG) between $0.5008 and $0.5164.

XRP/USDT daily chart 

A daily candlestick close above $0.4955, the 23.6% Fibonacci retracement of the decline between the March 11 top of $0.7440 and the April 13 bottom of $0.4188, could invalidate the bearish thesis for XRP. 

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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