The crypto market is currently watching a dramatic show led by the SEC and Ripple’s ongoing case. While several altcoins are currently on a downward path, Ripple’s XRP is subject to a lot of uncertainty. The ongoing legal battle between the US Securities and Exchange Commission (SEC) and Ripple Labs has clouded the XRP coin, pushing it into what some investors call the “fear zone.”
Ripple may face consequences
A major consequence of the lawsuit is the significant restrictions placed on Ripple’s access to its XRP reserves. Historically, Ripple has owned a large volume of XRP, periodically selling off portions to fund its operations.
However, the onset of the SEC lawsuit has led to severe restrictions on Ripple’s access to its reserves. The SEC has alleged that Ripple’s sale of XRP from its reserves was essentially a way to raise funds, bypassing conventional avenues such as initial public offerings (IPOs) or venture capital. This situation poses risks to the company’s liquidity and its ability to maintain operations at pre-litigation levels.
While Ripple has experienced growth in other global regions, the United States remains a crucial market for any fintech company. Ripple’s long-term viability largely depends on its freedom to operate in the US market. The ongoing litigation and the potential regulatory shifts it may bring have introduced a degree of uncertainty about this freedom.
Despite the storm clouds, there are reasons to believe in a potential XRP price rebound. Ripple Labs has fought tooth and nail against the SEC’s accusations and has managed to score some small victories. If Ripple can secure a decisive victory or even a favorable settlement, it could be the impetus for a strong XRP rebound.
What’s Next for the XRP Price?
This week started on a subdued note, with no new revelations from the ongoing legal battle between SEC and Ripple to take into account. Despite the lack of legal proceedings to evaluate, buzz surrounding the SEC vs. Ripple case has increased.
At the time of writing, the XRP price is trading at $0.42, down more than 1% in the past 24 hours. Analyzing the 4-hour price chart, XRP price is under intense bearish pressure after being rejected at an EMA50 resistance near $0.43.
However, there is strong buying pressure from bulls at $0.41, defending the immediate support level. If bulls push the XRP price above $0.43, a smooth upward rally is expected towards the $0.45-$0.46 resistance level.
On the bearish side, XRP could experience a sharp decline if sellers initiate a spike in short positions below $0.41, which will push the altcoin below the 38.6% Fib level of $0.37.