Exchange News 2024 : Ripple (XRP) saw a 30% price surge last week following a favorable outcome in the SEC vs. Ripple lawsuit. However, despite the impressive rally, the price failed to reach a new high, prompting large investors, or “whales,” to sell off their holdings. This on-chain activity suggests that XRP could be in for a significant correction in the near future.
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XRP Price ready to slide lower
On August 7, XRP’s price jumped by 30%, hitting a high of $0.644. However, this peak was still lower than the $0.658 high recorded on July 30, indicating a potential weakness in market demand. Since reaching $0.644, Ripple’s price has already dropped by 9%, signaling that the recent rally may soon reverse.
Currently trading around $0.585, XRP could see its recent gains erased if the downward trend continues. While an early-week rally might push the price back up to test the $0.613 resistance level, a failure to break through would suggest that buyers are losing momentum. If this happens, a further decline of nearly 10% could bring XRP down to the $0.560 to $0.555 support range.
On-chain Data Points to Bearish Trend for Ripple
The technical indicators are pointing to a bearish trend for XRP, and the on-chain data backs this up. According to Santiment’s Supply Distribution By Balance metric, wallets holding between 1 million and 10 million XRP accumulated 230 million tokens from July 17 to August 2, likely in anticipation of a favorable outcome in the SEC vs. Ripple lawsuit.
However, these same wallets began taking profits and selling off their holdings. By August 7, they had offloaded 150 million XRP, bringing their balance down to 3.8 billion tokens. This selling activity suggests a weakening outlook for XRP in the near term.
Further supporting this bearish outlook, the Whale Transaction Count indicator, which tracks transfers of $100,000 or more, also reflects this trend. On August 7, as XRP’s price surged by 30%, the number of large transactions spiked, signaling that these major investors were selling off their holdings.
Technical and on-chain data suggest that institutional investors offloaded their XRP holdings following the favorable conclusion of the SEC vs. Ripple lawsuit. While a short-term correction seems likely, this could be reversed if Bitcoin’s price continues to climb.
If Bitcoin’s upward momentum draws in buyers, XRP could break above the crucial $0.613 resistance level. Turning this resistance into a support zone could spark renewed bullish interest, potentially pushing XRP towards the next key target of $0.655.
Frequently Asked Questions (FAQs)
When did SEC vs. Ripple Lawsuit reach conclusion?
On August 7, Judge ordered Ripple Labs to pay a $125 million fine to the Securities and Exchange Commission (SEC), concluding the 3.5 year lawsuit.
What happened to Ripple (XRP) price after the SEC lawsuit conclusion?
XRP price rallied 30% but failed to produce a higher high, leading to a potential correction.
What does on-chain data suggest about XRP price outlook?
On-chain data confirms a bearish outlook, with XRP whales selling their holdings after the SEC vs. Ripple lawsuit conclusion on August 7.
What is XRP?
XRP is a digital currency developed by Ripple Labs Inc., a company known for its work in payment protocols and exchange networks. Unlike many other cryptocurrencies, XRP is specifically designed to enable fast and affordable cross-border transactions, making it a unique player in the cryptocurrency world.
Understanding XRP:
1. Purpose and Use
XRP was created to act as a bridge currency in financial transactions, particularly for cross-border payments. Traditional banking methods often involve multiple intermediaries, leading to slow and expensive transfers, especially across borders. Ripple’s network, using XRP, aims to solve these issues by providing almost instant and low-cost transactions.
2. RippleNet and the XRP Ledger
Ripple operates RippleNet, a payment network that connects banks, payment providers, and digital asset exchanges. XRP is the native currency of the XRP Ledger, a decentralized blockchain that supports asset transfers and acts as a bridge between different currencies. This allows users to send any currency, including fiat or other cryptocurrencies, using XRP to facilitate the transfer.
3. Speed and Cost of Transactions
One of XRP’s key advantages is its transaction speed and low cost. XRP transactions can be completed in just a few seconds, in contrast to traditional banking systems, which can take days. Moreover, the fees on the XRP Ledger are extremely low, often just a fraction of a cent, making it an attractive option for financial institutions looking to cut down on cross-border payment costs.
4. Consensus Mechanism
Unlike Bitcoin and Ethereum, which rely on energy-intensive mining processes, XRP uses the Ripple Protocol Consensus Algorithm (RPCA). This consensus protocol does not involve mining, making it more energy-efficient. Instead, a group of validators agrees on the order and outcome of transactions. This system allows for faster transaction processing and has a smaller environmental impact compared to traditional mining-based cryptocurrencies.
5. Supply and Distribution
XRP has a total supply of 100 billion tokens, all of which were pre-mined at its creation. This is different from Bitcoin, which is gradually mined over time. Ripple Labs initially held a large portion of XRP, and while they have been distributing it over time, this centralized control has raised concerns in the cryptocurrency community.
6. Regulatory and Legal Issues
XRP has faced significant regulatory scrutiny, particularly in the United States. In December 2020, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple Labs, claiming that XRP is a security and that Ripple conducted an unregistered securities offering. This lawsuit has had a major impact on XRP’s price and adoption. However, a favorable ruling for Ripple in 2023 led to a temporary price surge. The outcome of this case could have significant implications for how cryptocurrencies are regulated in the future.
7. Adoption and Partnerships
Despite the legal challenges, XRP has been adopted by various financial institutions and payment providers. Ripple has partnered with numerous banks and financial institutions around the world to use its RippleNet network and XRP for cross-border payments. These partnerships are key to Ripple’s strategy of positioning XRP as a tool for global remittances and financial transfers.
Conclusion
XRP is a cryptocurrency focused on improving the efficiency of cross-border payments. Its fast transaction speeds, low costs, and the technology behind the Ripple network make it a distinctive asset in the crypto space. However, it also faces ongoing challenges, particularly in the regulatory area, which could influence its future use and adoption. Despite these challenges, XRP remains one of the most prominent and widely used cryptocurrencies globally.