Ripple legal battle underway as on-chain metrics turn bullish, XRP eyes recovery to $0.50
|- Ripple transaction volume climbed to $3.96 billion on Monday, and retail traders capitulated, according to Santiment data.
- On-chain metrics paint a bullish picture for XRP recovery amidst the latest developments in the SEC vs. Ripple lawsuit.
- XRP wiped out nearly 1% of its value on Wednesday, technical indicators suggest recovery is likely.
Ripple (XRP) made a comeback above $0.48 on Tuesday and hovers above that level in Wednesday’s European session. Ripple on-chain metrics such as transaction volume and Network Realized Profit/Loss (NPL) have turned bullish, supporting a recovery in the altcoin.
The US Securities and Exchange Commission (SEC) vs. Ripple lawsuit proceeds with the issue of fines for the alleged violation of securities laws. While Ripple proposed $10 million in penalties, the SEC quoted $102.6 million in a filing on May 29.
Daily Digest Market Movers: Ripple traders see signs of recovery in bullish on-chain metrics
- Ripple on-chain metric transaction volume, which tracks the demand for an asset and its relevance among traders, noted a large spike on Monday, as Ripple’s transaction volume climbed to $3.96 billion, according to Santiment data.
- Higher transaction volume is associated with higher activity on the chain and demand for XRP among traders. When combined with the Network Realized Profit/Loss (NPL) metric, transaction volume offers a complete picture, as to whether traders are taking profits or losses and where XRP is headed.
XRP transaction volume vs. price
- The NPL metric shows consistent losses taken by XRP traders, a sign of capitulation. Capitulation is marked by traders shedding their holdings at a loss, and a recovery in the asset’s price typically follows.
- The large negative spikes on NPL represent XRP traders’ realized losses in the past week.
XRP NPL vs. price
- When the two metrics are combined, it is clear that large-volume transactions were associated with traders realizing losses, and this supports the thesis of capitulation for XRP. The altcoin could see a recovery soon if the historical trend repeats.
- The SEC vs. Ripple lawsuit has no new update after the discussion of settlement fees among the two parties.
Technical analysis: XRP eyes comeback to $0.5330 resistance
XRP is trading at $0.4841 on Wednesday. While the altcoin erases nearly 1% of its value on the day, the Moving Average Convergence Divergence (MACD) momentum indicator in the daily chart suggests a recovery in XR/USDT is likely.
The MACD shows green histogram bars above the neutral line, and the MACD line crosses above the signal line, supporting a bullish thesis for XRP.
XRP could rally towards the Fair Value Gap between $0.5008 and $0.5164, as seen in the chart below. The next resistance for Ripple is $0.5330.
XRP/USDT daily chart
On the contrary, if XRP suffers a correction, Ripple could find support at $0.4508, the June 7 low. Further support is the April 13 low of $0.4188.
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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