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Ripple Price Analysis: XRP Plummets Following Potential SEC Lawsuit

Last Updated January 26th 2021

Daily Ripple XRP Price Forecast

  • Ripple has dropped below both the 20-day and 50-day SMAs in the last five days.
  • XRP’s exchange in-flow has rapidly increased, indicating bearish sentiment.

The last few days have been pretty horrid for RIpple holders after the SEC decided to play Grinch and ruin their Christmas. The financial watchdog announced that they will be suing Ripple for selling XRP tokens as unregistered securities. This has caused the top-3 cryptocurrency to plummet rapidly.

 

SEC To Sue Ripple

The United States Security and Exchange Commission (SEC) is all set to sue Ripple for allegedly selling unlicensed securities in the form of XRP tokens, as per a Fortune report. Brad Garlinhouse, the CEO of Ripple, recently took to Twitter to seemingly legislate the issue in the court of public opinion. 

ripple news twitter announcement

Owing to their decentralized nature, BTC and ETH have escaped SEC enforcement. However, Ripple’s XRP has been criticized by many experts for being highly centralized. Ripple has maintained an escrow account of around 50 billion XRP (around half of the total supply). David Schwartz, Ripple’s CTO, claims these tokens have been "gifted" by the creators of the cryptocurrency. 

A recent Cointelegraph report cited a source with connections to Ripple, who said, “there’s no way it [XRP] is not a security.” Ripple posted a Wells submission document to its website explaining its position. It said: 

By alleging that Ripple’s distributions of XRP are investment contracts while maintaining that bitcoin and ether are not securities, the Commission is picking virtual currency winners and losers, destroying U.S.-based, consumer-friendly innovation in the process.

Ripple went on to allege that BTC and ETH are "two Chinese-controlled virtual currencies that the SEC has stated are not securities," and that "innovation in the cryptocurrency industry will be fully ceded to China" if the lawsuit brought by the SEC is successful. 

Garlinghouse had stated that Ripple would continue to thrive even with a security designation for XRP. However, the company has recently claimed to be seeking new headquarters outside of the United States, claiming that a lack of regulatory clarity was forcing its hand.

 

Twitter Reacts To SEC Lawsuit

#1 Brad Garlinghouse

Ripple has spent 8 years working tirelessly to build an incredible company transforming global payments. Our mission doesn’t stop!

#2 Jake Chervinsky

This is quite bad for Ripple. Not exactly worst case, that'd be securities fraud, but close.

XRP is basically useless if deemed a security. Alleging violations through present day is a kill shot. Charging individual executives is remarkable.

This is the SEC playing hardball.

#3 Anthony Pompliano 

Good morning to everyone except the people who thought they could sell unregistered securities and get away with it

 

Ripple Drops Hard 

Over the last five days, XRP has dropped from $0.584 to $0.375. In the process, XRP has crashed below the 20-day SMA and the 50-day SMA. With the MACD showing increasing bearish momentum and the market sentiment is overwhelmingly negative. One could expect a further drop.

xrp/usd daily chart 122320

Image: XRP/USD daily

The 200-day SMA ($0.294) needs to hold firm to make sure that the cross-border remittance token doesn’t fall any further. However, it does look like we are in for quite a sensational crash.

ripple exchangeinflow 122320

Image: Santiment

According to Santiment, the number of XRP tokens flowing into the exchanges has increased rapidly. This shows that investors are rushing to send their tokens from their private wallets to the exchange wallets. This is a sign that they are looking to sell-off their XRP and pocket their profits.

 

Key Price Levels To Watch For XRP

The 200-day SMA ($0.294) is a crucial level that the Ripple holders need to keep an eye out for. If the price breaks below this level, the fall could be absolutely catastrophic.

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