Ripple was among the biggest losers this week as the native cryptocurrency XRP fell around 13 percent.
XRP / USD fell to $ 0.44 during the early European session. The descent was based on two principles. The first was a broader corrective trend in the cryptocurrency market, where other top coins, including Bitcoin and Ethereum, saw a similar downward trend.
The second foundation was Ripple’s potential to face a potential US Securities and Exchange Commission lawsuit over its XRP sales. Traders saw the news as their excuse to remove their XRP holdings as they corrected down from their previous high of $ 0.79.
The Ripple token crashes after SEC news hits the wire. Source: XRPUSD on TradingView.com The Ripple token crashes after SEC news hits the wire. Source: XRPUSD on TradingView.com
“When there was news Ripple expected to be sued by the SEC for social volume XRP understandably exploded for CryptoCapital market capital no. 3 ”, according to the data analysis company Santment. “There was also an increase in tokens placed on exchanges as prices fell -17% over the past day.”
The wave inflows to the exchanges picked up speed after the SEC news. Source: SantimentRipple inflows on exchanges have gained momentum following SEC news. Source: Santiment
The SEC lawsuit revolves around whether or not Ripple Labs committed an illegal act in selling its XRP token to raise funds for its blockchain platform in 2017. This would view the entire event as a sale of securities.
Ripple currently directly holds $ 6.4 billion in XRP. The San Francisco company also has 48 billion more XRPs in escrow that it regularly sells to the public.
XRP still bullish?
XRP is now forming a bull flag. Traders interpret it as a bullish continuation pattern that pauses briefly after a sharp move. The pattern looks like a downward sloping channel / rectangle confirmed by two parallel trend lines from the previous trend.
Ripple’s bull flag formation in the game. Source: XRPUSD on TradingView.com Ripple’s bull flag formation in-game. Source: XRPUSD on TradingView.com
XRP / USD should technically try to break above the flag’s upper trendline to continue its uptrend. Should such a movement occur, the pair could grow by the height of the flagpole that formed in front of the flag itself. Its height is 0.27, which brings XRP / USD on its way to at least 0.8 USD in the upcoming sessions.
If the price declines more than 50 percent from its flag top it can invalidate the entire bullish continuation theory.