XRP price rallied sharply against Bitcoin (BTC) amid continued optimism about a potential settlement between Ripple, a San Francisco-based blockchain payments firm, and the U.S. Securities and Exchange Commission (SEC).
Settlement rumors fuel XRP price hike
On September 23, the XRP/BTC pair rose to 0.00002877 – its best level in 13 months – from 0.00002132, a price rally of 35% against Bitcoin in one day. Meanwhile, over the same time frame, the XRP rose a whopping 42% against the US dollar.
The Big Price Jumps In The XRP Market Started To Appear After Ripple And SEC Filed Motions for summary judgment with the court on Sept. 12 regarding their ongoing legal battle over allegations that Ripple has committed securities fraud.
In other words, Ripple and SEC agreed that the court should use the available evidence to rule by December 2022 on whether the blockchain company illegally raised money by selling XRP to avoid a lawsuit.
The price of XRP is up about 75% and 60% against Bitcoin and the dollar respectively since Ripple’s lawsuit, fueled by optimism about a possible win for Ripple.
The purchase accelerated further after Ripple CEO Brad Garlinghouse suggested the same in his recent interview with UKTN Business on September 22.
— HeadlineHunter!US (@HHunter_US) September 22, 2022
“People are realizing that the SEC is really going too far and they are not following staunch allegiance to the law in their pursuit of an outcome.” […] The SEC is a bit lost.”
Buying XRP sharks and whales since 2020
The price surge also comes amid wealthy investors who have been consistently accumulating XRP tokens since May.
The percentage of entities holding between 1 million and 10 million XRP tokens – known as sharks and whales – as a whole increased to 6.35% as of September 23, 2022, up from 5.43% as of December 31, 2020, according to data van Saniment, who noted:
“Active shark and whale addresses with 1 to 10 million $XRP have been in an accumulation pattern since late 2020.”
Meanwhile, during the given period, there were also entities with more than 10 million XRP tokens that hit an all-time low of 70.75% of the current supply.
It seems that traders have bought into the rumor ahead of the Ripple vs. SEC judgment. But while it remains to be seen whether this will change to “sell the news” depending on the outcome of the ruling, XRP’s technical data points to a possible correction.
Notably, XRP has already become an overbought asset against Bitcoin and the dollar.
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The relative strength index (RSI) for XRP/BTC reached close to 85 on September 23, well above the overbought threshold of 70 that typically precedes a strong price correction or consolidation.
XRP/BTC has already corrected nearly 10% from its 13-month peak, as shown in the chart below. The pair is now testing 0.00002601 as a near-term support, which if broken to the downside could test 0.00002079 as its primary downward target or a 20% drop from current levels by the end of the year .
Meanwhile, XRP is seeing a similar sharp correction against the dollar after crossing paths with several months of declining trendline resistance as shown below.
With a longer pullback in trendline resistance, XRP could test its near-term horizontal trendline support as its next downward target. In other words, the XRP/USD pair could drop to $0.31, nearly 40% lower than its September 23 price by the end of 2022.
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