Highlights
- Why is XRP Up? When most of the crypto world is reeling along with other risk assets after the last fed hike, Ripple is up 50%.
- A long-standing investigation by the SEC on the legitimacy of funds raised by Ripple in its IPO has concluded, leaving Ripple and its founders clean.
- The positive verdict and expectations of another ruling in favour of Ripple in declaring it not a security is leading to positive sentiment for the coin.
- The Ripple hype train may run out of steam though so caution must be exercised amid the overall risk-off market
Introduction
2022 has been a rough year for the financial markets. Not only are most financial assets trading for a fraction of their 2021 highs, but the current macroeconomic environment does not suggest any upward momentum. Following the Federal Reserve’s decision to increase the federal fund rate by 0.75% – the third three-quarter hike in a row – chaos ensued in both the cryptocurrency and traditional financial markets. Bitcoin dropped to $18,200, Ethereum dropped by almost 10%, and traditional market indexes like the Dow and S&P dropped substantially.
Image Source: Yahoo Finance – S&P 500
Amidst this chaos, there is one cryptocurrency that is defying all odds and has given investors around 50% profit since the Fed’s hike announcement. Which cryptocurrency is it? What is fuelling the rally? And is it something that will last long?
The Lawsuit
In December 2020, the Securities and Exchange Commission announced that it had filed charges against Ripple and two of its executives, alleging that they had sold unregistered securities in the form of XRP tokens. According to the SEC, Ripple raised more than $1.3 billion through its offering since its IPO in 2013. The SEC also alleged that almost $600 million worth of XRP was unregistered by Garlinghouse and Larsen, its current and past CEO.
For two years, there were various investigations and court cases, but on September 18th, news broke out that the search ended and Ripple was clean. The next hill that must be crossed is whether XRP is a security or not, and investors are bracing for the best.
Both the SEC and Ripple separately requested the presence of a judge to rule on Ripple’s stance as regards violating US securities laws, with the former still insisting on its investment contract position. The commission insists that a contract could still be effective even without a signed document, something the Ripple organization finds laughable.
On Saturday, 18th of September, Ripple’s CEO quoted the general counsel’s tweet about the SEC being unable to identify any contract. His comments on the SEC’s attempt at impermissible efforts to extend their jurisdiction seems valid.
Image Source: Twitter – Ripple CEO
Examining it from a technical analysis point of view, Ripple’s chart shows there is a lot of interest in the coin. Since September 18, the daily volume has increased by almost 15%, and the community reaction to the news indicates that more upside might come.
Image Source: Cointelegraph – Ripple Chart
Shouts of “To the moon” have resumed, with fair estimations of $1 — $2 being predicted in 2023. Price charts also suggest we might have found a price bottom, as the current lows coincide with the lows from the last 6 months. Bar macroeconomic factors, any positive news from the cryptocurrency is primed to shoot it up.
Why is XRP UP : Is it a Short Term Pump or a Sustainable Reversal?
Will the trend be a continuous one, or will it drop down to previous levels? To be fair, a lot of factors will influence the price of the cryptocurrency, but with current macroeconomic factors, it is hard to believe that Ripple will go on a sustained rip-up.
Image Source: Twitter – Ripple Community Hype
Hype could of course, play a huge role in the upward trend of a cryptocurrency, making many people FOMO into it, but it is not enough to keep it moving upwards. Of course, Ripple is supposed to be worth more than its current price, but caution should not be thrown to the wind as there is a lot of supporting arguments for a bear market across the board to pull XRP down.
