• XRP price prepares for a massive crash as the technicals indicate a bearish continuation pattern.
  • A breakdown of the $0.386 level will trigger a 42% crash to $0.221.
  • If Ripple bulls flip the $0.488 hurdle into a support level it will invalidate the bearish thesis.

XRP price shows an extensive bearish outlook that matches Bitcoin’s macro narrative. The pessimistic scenario is only one support breakdown away from triggering a nosedive. So, investors need to be careful with their investments in XRP/Ripple.

Ripple gains the upper hand versus SEC

Over the last few weeks, Ripple aka the defendant has filed four RFAs (Request For Admission) with regard to a speech delivered by the former SEC director William Hinman in 2018. The speech, which mainly outlined the application of the securities laws on digital assets is now a pivotal piece of information that will help decide the case.

As reported earlier, the last few requests for admissions have been denied by the prosecutors aka the US Securities and Exchange Commission (SEC). The SEC claims that the documents or the internal discussions that went into the speech are legal and bound by attorney-client privileges.

However, in a development on June 8, the SEC stated to the judge that Hinman sought legal counsel from the SEC attorneys on the application of securities laws to digital assets for his speech.

The prosecutors further added, “that speech was very legal.”

Judge Sarah Netburn interrupted the SEC’s response to make sure she heard that sentence properly. 

This development is a huge win for Ripple since the SEC has taken multiple stances on what the speech was. In some of the hearings, the prosecutors stated that former director William Hinman’s speech was his opinion but claimed at following hearings that conversations were protected by the attorney-client privilege.

Therefore, the burden of proof will be on the SEC lawyers, allowing Ripple to gain an upper hand.

XRP price needs to get culled

XRP price seems to be traversing a continuation pattern known as a bearish pennant. These patterns are composed of two parts – the initial steep decline or ‘flagpole’ followed by the sideways consolidation or ‘pennant’. In the case of Ripple, the 42% crash between May 5 and 12 formed the flagpole and the consolidation that followed, in the form of lower highs and higher lows, the pennant. 

The pattern forecasts a 42% crash which is basically an extension of the length of the flagpole lower. This produces a target of $0.221 from a theoretical breakout point at $0.386.

From a macro perspective, this bearish pennant formation makes sense since Bitcoin price, which influences all other cryptocurrencies, also forecasts a potential crash to $20,000 or lower. Hence, market participants looking to invest over the long-term horizon should wait before making any decisions based on intraday volatility.

While the setup forecasts a 42% nosedive to $0.221, there are multiple support levels that might absorb the selling pressure. The $0.302 and $0.250 are two such blockades that will give bears a run for their money. 

These levels played significant roles from late 2018 through to late 2020 and are likely to put up hefty support. Hence, a breakdown of these levels is crucial for bears to reach their targets.

XRP/USDT 1-day chart

XRP/USDT 1-day chart

Yet, if XRP price were to witness a sudden surge in buying pressure that pushed it up to breach the pennant’s upper trend line, it would dent the bearish narrative. This move might also be a fakeout, however – a bull trap that will eventually fall back down anyway.

On the other hand, the recent development of the SEC v Ripple lawsuit seems to have given Ripple the upper hand while the SEC is on the back foot. If there is even a slight hint that the defendants will come out of this case victorious, the XRP price could surge exponentially.

In such a case, a flip of the $0.488 hurdle into a support level will invalidate the bearish thesis. This development could see the XRP price climb higher and retest the intermediate resistance barrier at $0.578.

 


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended Content

Editors’ Picks

Ripple's XRP set sights on $1.100 following renewed investor interest

Ripple's XRP set sights on $1.100 following renewed investor interest

Ripple's XRP rallied nearly 20% on Tuesday, defying the correction seen in Bitcoin and Ethereum as investors seem to be flocking toward the remittance-based token. 

More Ripple News
Dogecoin Price Prediction: Could DOGE ETF spark new all-time high after 130% rise?

Dogecoin Price Prediction: Could DOGE ETF spark new all-time high after 130% rise?

Dogecoin rose over 15% on Tuesday as traders anticipate a price move toward the $1 threshold following Bloomberg analyst Eric Balchunas's post regarding a DOGE exchange-traded fund.

More Dogecoin News
Hedera's HBAR rallies nearly 20% as Canary Capital files for HBAR ETF

Hedera's HBAR rallies nearly 20% as Canary Capital files for HBAR ETF

Hedera's HBAR is up nearly 20% on Tuesday as Canary Capital submitted an S-1 registration to the US Securities & Exchange Commission for an HBAR exchange-traded fund.

More Hedera News
Ethereum Price Forecast: ETH down despite hype from Beam Chain unveil

Ethereum Price Forecast: ETH down despite hype from Beam Chain unveil

Ethereum is down 1% on Tuesday despite developer Justin Drake proposing the Beam Chain, a new consensus layer that aims to ship a series of changes that will fast-track the Main chain's roadmap to faster block times and quantum resistance.

More Ethereum News
Bitcoin: Further upside likely after hitting new all-time high

Bitcoin: Further upside likely after hitting new all-time high

Bitcoin hit a fresh high of $76,849 on Thursday as crypto-friendly candidate Donald Trump won the US presidential election. Institutional demand returned with the highest single-day inflow on Thursday since the ETFs’ launch in January.

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP