XRP Hits 13-Month High Against Bitcoin With 35% Daily Gain – But Is A Correction Inevitable?
The XRP price posted a sharp rally against Bitcoin (BTC) on continued optimism about a potential settlement between Ripple, a San Francisco-based blockchain payments firm, and the US Securities and Exchange Commission (SEC).
Settlement rumors fuel XRP price boom
On September 23, the XRP/BTC pair rose to 0.00002877 – the best level in 13 months – from 0.00002132, a 35% price gain against Bitcoin in one day. Meanwhile, in the same time frame, XRP rose by a whopping 42% against the US dollar.
The big price jumps in the XRP market started to appear after Ripple and the SEC filed proposals for a summary judgment with the court on September 12 regarding 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 money by selling XRP by December 2022, thus avoiding a trial.
XRP’s price has increased by approx. 75% and 60% against Bitcoin and the dollar, respectively, since Ripple’s court case, fueled by optimism about a possible victory for Ripple.
The purchase further accelerated after Ripple CEO Brad Garlinghouse suggested the same in his recent interview with Fox Business on September 22.
BREAKING: Ripple CEO @BGarlinghouse Appears on Fox Business Amid $XRP Price increase approaching $0.50
— HeadlineHunter!US (@HHunter_US) 22 September 2022
Garlinghouse:
“People are realizing that the SEC is really overreaching, and they’re not following a faithful allegiance to the law in pursuit of a result […] The SEC has kind of lost its way.”
XRP sharks and whales bought since 2020
The price increase also comes amid the consistent 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 – has risen overall to 6.35% on September 23, 2022, up from 5.43% on December 31, 2020, according to data from Santiment, who noted:
“Active shark and whale addresses holding $1 to $10 million XRP have been in an accumulation pattern since late 2020.”
Meanwhile, the given period also witnessed units holding over 10 million XRP tokens hitting a low of 70.75% of the day’s supply.
Pain ahead?
Traders seem to have bought into the hype in the run-up to Ripple vs. The SEC Ruling. But while it remains to be seen whether this will turn into “sell the news” depending on the outcome of the ruling, XRP’s technicals suggest a potential correction.
Notably, XRP has already become an overbought asset relative to Bitcoin and the dollar.
Related: Total Crypto Market Cap Shows Strength Even After The Merger And Federal Reserve Rate Hike
The relative strength index (RSI) for XRP/BTC reached nearly 85 on September 23, well above the overbought threshold of 70 that usually precedes a strong price correction or consolidation.
XRP/BTC has already corrected by almost 10% from its 13-month peak, 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 see it test 0.00002079 as its primary downside target or a 20% drop from current levels by the end of the year.
Meanwhile, XRP is seeing a similarly sharp correction against the dollar after crossing paths with a multi-month descending trendline resistance, as shown below.
An extended pullback from the trendline resistance could see XRP test its nearby horizontal trendline support as its next downside target. In other words, the XRP/USD pair could fall to $0.31 by the end of 2022, down almost 40% from the September 23 price.
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