Home CryptocurrencyAltcoin XRP Hits 13-Month High Against Bitcoin With 35% Daily Gain – But Is A Correction Inevitable?

XRP Hits 13-Month High Against Bitcoin With 35% Daily Gain – But Is A Correction Inevitable?

by SuperiorInvest

XRP the price has seen a sharp rise against bitcoin (BTC) on continued optimism about a potential settlement between San Francisco-based blockchain payments firm Ripple and the US Securities and Exchange Commission (SEC).

Rumors of the settlement are fueling the XRP price boom

On September 23, the XRP/BTC pair jumped to 0.00002877 – its best level in 13 months – from 0.00002132, a 35% increase in price against Bitcoin in one day. Meanwhile, XRP rose as much as 42% in the same time frame against the US dollar.

XRP/BTC and XRP/USD daily price chart. Source: TradingView

After that, big price jumps started to appear in the XRP market Ripple and the SEC filed motions for summary judgment in court on September 12 in their ongoing legal battle over allegations that Ripple committed securities fraud.

In other words, Ripple and the SEC agreed that the court should use the available evidence to reach a verdict on whether the blockchain firm illegally raised funds by selling XRP until December 2022, avoiding a trial.

The price of XRP has risen about 75% and 60% against Bitcoin and the dollar, respectively, since Ripple’s court filing, fueled by optimism over a potential win for Ripple.

The buying accelerated further after Ripple CEO Brad Garlinghouse suggested the same in his recent interview with Fox Business on September 22.

Garlinghouse:

“People are realizing that the SEC is really overreacting and not following the law faithfully in pursuit of a result.” […] The SEC has kind of lost its way.”

Buying XRP sharks and whales from 2020

The price increase also comes amid a steady accumulation of XRP tokens by wealthy investors since May.

The percentage of entities holding between 1 million and 10 million XRP tokens – known as sharks and whales – rose overall to 6.35% as of September 23, 2022, from 5.43% as of December 31, 2020. according to to Santiment’s data, which noted:

“Active shark and whale addresses with $1-10 million XRP have been accumulating since late 2020.”

Active XRP addresses of sharks and whales. Source: Santiment

Meanwhile, entities with more than 10 million XRP tokens also reached an all-time low of 70.75% of the current supply during the period.

Pain ahead?

It seems that the traders were buy the rumor before the Ripple vs. SEC. But while it remains to be seen whether this will turn into a “news sell” depending on the outcome of the decision, XRP’s technicals indicate a potential correction.

Notably, XRP has already become an overbought asset against Bitcoin and the dollar.

Related: Total cryptocurrency market cap shows strength even after merger and Federal Reserve rate hike

The Relative Strength Index (RSI) for XRP/BTC reached nearly 85 on September 23, well above the 70 overbought threshold that usually precedes a strong price correction or consolidation.

XRP/BTC has already corrected almost 10% from its 13-month high as shown in the chart below. The pair is now testing 0.00002601 as its short-term support, which, if broken to the downside, could test 0.00002079 as the primary downside target by the end of the year, or a 20% decline from current levels.

XRP/BTC daily price chart. Source: TradingView

Meanwhile, XRP is tracking a similar sharp correction against the dollar after crossing a path with multi-month downward trend line resistance as shown below.

XRP/USD three-day price chart. Source: TradingView

An extended pullback from the trendline could see XRP test its short-term horizontal trendline support as its next downside target. In other words, the XRP/USD pair could drop to $0.31 by the end of 2022, a drop of almost 40% from the September 23 price.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Cointelegraph.com. Every investment and trading step involves risk, you should do your own research when making a decision.

Source Link

Related Posts

%d bloggers like this: