XRP hits 13-month high versus Bitcoin with 35% daily surge — But is a correction inevitable?

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XRP price post­ed a sharp ral­ly against Bit­coin (BTC) on con­tin­ued opti­mism about a poten­tial set­tle­ment between Rip­ple, a San Fran­cis­co-based blockchain pay­ment firm, and the U.S. Secu­ri­ties and Exchange Com­mis­sion (SEC).

Settlement rumors fuel XRP price boom 

On Sep. 23, the XRP/BTC pair surged to 0.00002877 — its best lev­el in 13 months — from 0.00002132, a 35% price ral­ly ver­sus Bit­coin in one day. Mean­while, the same time­frame saw XRP ris­ing as much as 42% against the U.S. dol­lar.

XRP/BTC and XRP/USD dai­ly price chart. Source: TradingView

The big price leaps in the XRP mar­ket start­ed appear­ing after Rip­ple and SEC filed motions for a sum­ma­ry judg­ment with the court on Sep. 12 regard­ing their ongo­ing legal bat­tle over alle­ga­tions that Rip­ple com­mit­ted secu­ri­ties fraud.

In oth­er words, Rip­ple and SEC agreed that the court should use avail­able evi­dence to reach a ver­dict by Decem­ber 2022 on whether the blockchain firm ille­gal­ly raised funds by sell­ing XRP, and thus avoid­ing trial. 

XRP’s price has boomed approx­i­mate­ly 75% and 60% ver­sus Bit­coin and the dol­lar, respec­tive­ly, since Rip­ple’s court fil­ing, fueled by opti­mism of a pos­si­ble win for Ripple. 

The buy­ing accel­er­at­ed fur­ther after Rip­ple CEO Brad Gar­ling­house sug­gest­ed the same in his recent inter­view with Fox Busi­ness on Sep. 22.

Gar­ling­house:

“Peo­ple real­ize that the SEC is real­ly over­reach­ing and they are not fol­low­ing a faith­ful alle­giance to the law in pur­suit for an out­come […] The SEC has kind of lost its way.”

XRP sharks and whales buying since 2020

The price surge also comes amid rich investors con­sis­tent­ly accu­mu­lat­ing XRP tokens since May.

The per­cent­age of enti­ties hold­ing between 1 mil­lion and 10 mil­lion XRP tokens — known as sharks and whales — has risen as a whole to 6.35% on Sep. 23, 2022, up from 5.43% on Dec. 31, 2020, accord­ing to data from San­ti­ment, which noted: 

“Active shark & whale address­es hold­ing 1m to 10m $XRP have been in an accu­mu­la­tion pat­tern since late 2020.”

Active XRP shark and whale address­es. Source: Santiment

Mean­while, the giv­en peri­od also wit­nessed enti­ties with over 10 mil­lion XRP tokens reach­ing an all-time low 70.75% of the cur­rent supply. 

Pain ahead?

It appears that traders have been buy­ing the rumor in the run-up to the Rip­ple vs. SEC ver­dict. But while it remains to be seen if this will then turn into “sell the news” depend­ing on the out­come of the rul­ing, XRP’s tech­ni­cals are hint­ing at a poten­tial correction.

Notably, XRP has already become an over­bought asset ver­sus Bit­coin and the dollar.

Relat­ed: Total cryp­to mar­ket cap shows strength even after the Merge and Fed­er­al Reserve rate hike

The rel­a­tive strength index (RSI) for XRP/BTC reached almost 85 on Sep. 23, way above the over­bought thresh­old of 70 that typ­i­cal­ly pre­cedes a strong price cor­rec­tion or consolidation.

XRP/BTC has already cor­rect­ed by near­ly 10% from its 13-month peak, as shown in the chart below. The pair now tests 0.00002601 as its short-term sup­port, which, if bro­ken to the down­side, could have it test 0.00002079 as its pri­ma­ry down­side tar­get or a 20% drop from cur­rent lev­els by the end of the year. 

XRP/BTC dai­ly price chart. Source: TradingView

Mean­while, XRP eyes a sim­i­lar sharp cor­rec­tion ver­sus dol­lar after cross­ing paths with a mul­ti-month descend­ing trend­line resis­tance, as shown below.

XRP/USD three-day price chart. Source: TradingView

An extend­ed pull­back from the trend­line resis­tance could see XRP test its near-term hor­i­zon­tal trend­line sup­port as its next down­side tar­get. In oth­er words, the XRP/USD pair could drop to $0.31 by the end of 2022, down almost 40% from today’s price.

The views and opin­ions expressed here are sole­ly those of the author and do not nec­es­sar­i­ly reflect the views of Cointelegraph.com. Every invest­ment and trad­ing move involves risk, you should con­duct your own research when mak­ing a decision. 



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