XRP has continued to shed some of the gains picked up on July 13 due to several factors contributing to bearish sentiments and large-scale selling pressure.
XRP has printed three consecutive losing candles over the past three days. A bearish start to the day has seen the asset drop by an additional 2.42%, bringing support levels at $0.62 in view. Several factors contributing to wide-scale selling pressure have triggered these persistent declines.
Possible Factors Behind XRP’s Collapse
XRP’s downturn has come when most crypto assets are on stable grounds, with minor losses. This pattern suggests that XRP’s declines are compounded by unique unfavorable situations and the overall bearish sentiment surrounding the crypto market.
One such unique situation is the likelihood of an appeal from the US SEC in the Ripple lawsuit. Immediately after the ruling, several industry pundits emphasized that the SEC could appeal the verdict. Although the agency demonstrated uncertainties at the early stages, later discoveries pointed to the likelihood of an appeal.
Reports of a possible appeal have triggered investors’ angst, as market watchers fear this could drag the case further. Attorney John Deaton stressed that, despite an appeal, XRP’s non-security status remains the law for up to two years. However, apprehensions have prevailed.
Ripple’s CLO, Stuart Alderoty, noted that the company is not afraid of an appeal from the SEC, assuring that the court of appeals would affirm the ruling from Judge Analisa Torres. While these remarks catalyzed a modest sense of relief, investors remain concerned.
In addition, a recent ruling from SDNY District Judge Jed Rakoff in the SEC vs. Terraform Labs case compounded these concerns. The judge denied Terraform Labs’ motion to dismiss the SEC’s case against them, citing non-jurisdiction as they used the XRP ruling as a precedent.
Judge Rakoff challenged Judge Torres’ ruling on the case, disagreeing with the reasoning, especially with the distinction between retail and institutional investors. This argument triggered apprehensions that the Court of Appeals could take a similar approach.
In addition to legal battle concerns, the US dollar index (DXY) has continued to rise since July 27. The DXY has appreciated by over 20% over the past week, equally contributing to the weakening of XRP. Moreover, XRP’s 24-hour trade volume has declined, signaling a drop in interest.
XRP Price Outlook
Amid these unfavorable conditions, XRP has plunged to test the lows at $0.62. Prominent analyst WatersAbove recently warned that the asset needs to hold above the 34-day EMA on the daily timeframe to prevent a collapse to the $0.55 to $0.58 range. XRP was trading at $0.6611 then.
At its current value of $0.6207, XRP has broken below the 34-day EMA ($0.6525). If the analyst’s forecast materializes, the markets could witness further dips to the $0.58 territory. However, XRP still boasts two major support levels before the $0.58 zone.
The first support sits at $0.6090, looking to hedge against declines below the $0.60 psychological level. A break below $0.60 is imminent if this support fails to hold. However, the bears would encounter another support at $0.5962, preventing a drop to the $0.58 level.