XRP hovers above $0.50 as Ripple joins alliance to simplify recovery of digital assets

Ripple and XRPL Labs have joined the DeRec Alliance as founding members.
The DeRec Alliance brings Web3 firms together to work on the recovery of digital assets in a secure manner across wallets.
XRP tested support at $0.50 on Thursday, exchanging hands at $0.5174 on Friday.

XRP trades around $0.5174 early on Friday, wiping out gains from earlier in the week, as Ripple announced it has joined an alliance to support digital asset recovery alongside Hedera and the Algorand Foundation.

The other key catalyst influencing XRP price, which is testing critical support at $0.50, is the lawsuit that Ripple faces against the Securities and Exchange Commission (SEC) vs. Ripple over whether the sales of XRP to institutional investors are considered an unregistered sales of securities. The two parties have filed their motions, opposing motions and supporting evidence in the remedies phase, and now await a ruling on the penalties to be imposed on Ripple for this alleged violation of securities laws.

Daily Digest Market Movers: Ripple and XRPL Labs join alliance to support blockchain recovery

Cross-border payment remittance firm Ripple announced on Thursday that it has joined an alliance (DeRec alliance) alongside Algorand Foundation and Hedera to support the recovery of digital assets in a secure manner. Ripple and XRPL Labs have joined as founding members and hold a two-year seat on the Technical Oversight Committee (TOC).
The firm will provide input on the alliance’s governance structure and offer input on core policies to make the recovery of digital assets, accounts, passwords and other data, as simple as in Web2 ecosystems.
The other market mover for XRP price is the lawsuit between Ripple and the SEC. The latest development in the legal battle is that the two parties have filed their motions, reply briefs and opposition to replies in the remedies phase. XRP holders await the court’s decision on the SEC’s demand for $2 billion in fines and Ripple’s counter of $10 million.

Technical analysis: XRP is likely to sweep liquidity at $0.46

The XRP price has fallen 2.7% so far this week, but it has maintained above the key support of $0.50, which aligns with a psychological level. Amid the sideways trend that Ripple has experienced in the last few weeks, momentum indicators can give clues about the next likely move.

Two important momentum indicators give contradictory views in XRP’s case. The Relative Strength Index (RSI) falls to around 40 in all three major charts (weekly, daily and 4-hour), suggesting that bullish momentum appears to be waning. However, the Moving Average Convergence Divergence (MACD) indicator shows green histogram bars above the neutral line, signaling a positive momentum in XRP price trend.

If selling pressure persists, Ripple is likely to suffer an 8% correction and sweep liquidity at the weekly support level at $0.4665 seen on April 19. Two key levels that have been respected since mid April stand out on the weekly time frame– support at $0.4665 and resistance at $0.5630.

XRP/USDT 1-day chart

A daily candlestick close above $0.53, the 50% Fibonacci retracement level of the decline from April 9 top of $0.6431 to the April 13 low of $0.4188, could invalidate the bearish thesis. In such a case, XRP would face the next resistance at $0.5630, the weekly resistance level set on April 6.

SEC vs Ripple lawsuit FAQs

Is XRP a security?

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.

How does the ruling affect Ripple in its legal battle against the SEC?

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.

What are the implications of the ruling for the overall crypto industry?

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.

Is the SEC stance toward crypto assets likely to change after the ruling?

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.

Can the court ruling be overturned?

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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