XRP suffers 7% drop on Monday, hovers around $0.50 support
- Ripple is preparing for its stablecoin launch as it announces $10 million investment in tokenized US Treasury bills.
- Ripple’s bullish updates have failed to catalyze gains in XRP amidst the market-wide crypto correction.
- XRP hovers around key support at $0.50 as traders await Bitcoin recovery and SEC lawsuit ruling.
Ripple (XRP) shared several key updates in its Q2 2024 report. The bullish updates in the report have failed to catalyze gains in XRP since the altcoin was hit by a market-wide crypto correction that pushed it under psychological support at $0.50.
XRP hovers around $0.50 at the time of writing, down nearly 7% on Monday.
Daily digest market movers: Ripple shares bullish developments, XRP crushed under market-wide correction
- Ripple shares details of its stablecoin, its features and a disclosure that its availability is subject to regulatory approval.
- In its Q2 2024 report published recently, the firm said it expects a “fair approach” and ruling in the Securities & Exchange Commission’s (SEC) lawsuit against Ripple.
- The judge is expected to rule on the issue of Ripple’s institutional sales of XRP and the settlement or fine to be imposed on the firm for the alleged securities law violation.
- XRP suffered a steep correction in the market-wide bloodbath that pushed Bitcoin under the $50,000 level.
- The crypto market observed $1.06 billion in liquidations within a 24-hour time frame and XRP dipped to $0.44 low, before beginning a recovery.
- XRP is down nearly 7% on the day, and the asset is hovering close to the psychologically important $0.50 level on Monday.
Technical analysis: XRP attempts comeback above $0.50
Ripple broke out of its downward trend on July 13. The altcoin hit a local top of $0.6586 on July 31. Since then the altcoin has suffered a deep correction, down to $0.4319.
Ripple dipped into the imbalance zone between $0.4426 and $0.4425 as seen in the XRP/USDT daily chart. The inefficiencies under $0.50 have been filled, meaning Ripple can begin its recovery.
The Relative Strength Index (RSI) reads 35.90 close to the oversold zone, meaning there is an opportunity for sidelined traders to enter. XRP could target the $0.60 level in its rally, a 22% gain from the current price.
XRP/USDT daily chart
A daily candlestick close under $0.45 support could invalidate the bullish thesis and signal further correction in the altcoin.
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.
Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
