Ripple's XRP could rally 50% following renewed investor interest
Ripple's XRP rallied nearly 20% on Tuesday, defying the correction seen in Bitcoin and Ethereum as investors seem to be flocking toward the remittance-based token. On the technical side, XRP could rally nearly 50% if it sustains a firm close above the neckline resistance of an inverted head and shoulders pattern.
XRP has seen the highest gains in the top ten cryptocurrencies by market capitalization after Dogecoin in the past 24 hours. While Bitcoin, Ethereum, and Solana struggled to post gains on Tuesday, XRP rose by nearly 20%, suggesting renewed investor interest.
The optimism among investors is visible in XRP's futures open interest, which has surged by over 75% from $681 million on November 5 to over $1.2 billion on November 12.
XRP Open Interest | Coinglass
Open interest (OI) is the total number of outstanding contracts in a derivatives market. When OI grows alongside prices, it indicates an influx of new capital from investors to support the price uptrend.
A similar bullish trend is visible in XRP's options market on the Deribit exchange. According to Amberdata, 5.6 million call contracts are concentrated on the $0.72 strike price at the November 29 expiry.
XRP Options data | Amberdata
Call options are contracts that give an investor the right to buy an asset at a predetermined price within a specific timeframe. Traders buying call options at the $0.72 strike price indicate expectations that prices will rise beyond this level on or before the November 29 expiration. Hence, the huge pool of call traders is incentivized to defend this price level.
Ripple Price Forecast: XRP could rally 50% if it overcomes key resistanceRipple's XRP is trading near $0.7300 after recording $21.38 million in liquidations in the past 24 hours. Liquidated long and short positions accounted for $14.37 million and $7.01 million, according to Coinglass data.
On the weekly chart, XRP is showing signs of a massive breakout after breaking above the 100-day Simple Moving Average (SMA) and testing the neckline resistance of an inverted head and shoulders pattern.
XRP/USDT weekly chart
This neckline resistance at $0.7440 is also its yearly high resistance. If XRP sustains an extended breakout above this level, it could rally nearly 50% to a three-year high of $1.100, last seen in November 2021.
On its way up, the remittance-based token must overcome the $0.8547 and $0.9380 key resistance levels to complete the potential 50% rally.
The Relative Strength Index (RSI) and Awesome Oscillator (AO) are above neutral levels, indicating rising bullish momentum.
A daily candlestick close below $0.4893 will invalidate the bullish thesis.
It depends on the transaction, according to a court ruling released on July 14, 2023: For institutional investors or over-the-counter sales, XRP is a security. For retail investors who bought the token via programmatic sales on exchanges, on-demand liquidity services and other platforms, XRP is not a security.
The United States Securities & Exchange Commission (SEC) accused Ripple and its executives of raising more than $1.3 billion through an unregistered asset offering of the XRP token. While the judge ruled that programmatic sales aren’t considered securities, sales of XRP tokens to institutional investors are indeed investment contracts. In this last case, Ripple did breach the US securities law and had to pay a $125 million civil fine.
The ruling offers a partial win for both Ripple and the SEC, depending on what one looks at. Ripple gets a big win over the fact that programmatic sales aren’t considered securities, and this could bode well for the broader crypto sector as most of the assets eyed by the SEC’s crackdown are handled by decentralized entities that sold their tokens mostly to retail investors via exchange platforms, experts say. Still, the ruling doesn’t help much to answer the key question of what makes a digital asset a security, so it isn’t clear yet if this lawsuit will set precedent for other open cases that affect dozens of digital assets. Topics such as which is the right degree of decentralization to avoid the “security” label or where to draw the line between institutional and programmatic sales persist.
The SEC has stepped up its enforcement actions toward the blockchain and digital assets industry, filing charges against platforms such as Coinbase or Binance for allegedly violating the US Securities law. The SEC claims that the majority of crypto assets are securities and thus subject to strict regulation. While defendants can use parts of Ripple’s ruling in their favor, the SEC can also find reasons in it to keep its current strategy of regulation by enforcement.
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