Ripple (XRP) is up 5% on Tuesday following recent positive developments surrounding its ecosystem and JP Morgan’s prediction of over $8 billion in inflows into XRP ETF if it gains approval from the Securities and Exchange Commission (SEC).
Ripple’s XRP has witnessed $8.06 million in futures liquidations in the past 24 hours, per Coinglass data. The total amount of long liquidations is $2.56 million, while liquidated shorts accounted for $5.51 million.
XRP crossed above $2.65 for the first time in nearly a month after bouncing off the $2.33 support level — which is strengthened by the 50-day Simple Moving Average (SMA) — and surging above a bullish pennant.
The remittance-based token is approaching the $2.90 resistance level — which marks its highest price in six years — as investors anticipate a rally to a new all-time high in the coming weeks.
If XRP continues holding the pennant’s upper boundary and the $2.33 as key support levels, it could overcome the $2.90 resistance and rally to tackle its all-time high resistance of $3.55.
The Relative Strength Index (RSI) and Awesome Oscillator (AO) are above their neutral level, indicating dominant bullish momentum. However, the Stochastic Oscillator (Stoch) is in the overbought region, indicating a correction is imminent.
A daily candlestick close below $1.96 will invalidate the thesis.
SEC vs Ripple lawsuit FAQs
It depends on the transaction, according to a court ruling released on July 14, 2023: 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 had to pay a $125 million civil fine.
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 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.
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