XRP surged more than 5% on Tuesday as buying pressure in the altcoin market increased, recent fundamentals showed that major whales in the Ripple-based token held onto their assets despite the sell-off in the broader crypto market last week.
Potential bullish catalysts such as the expected launch of an XRP ETF in 2025, President-elect Donald Trump, and the inauguration of a new SEC administration on January 20 could trigger a holding stance.
The remittance-based token bounced off the triangle support trend line around $2.2 and is currently trying to move higher. Coinglass data indicates that XRP saw $5 million in liquidations for the day. There were $1.73 million and $3.5 million in liquidated long and short positions, respectively.
The altcoin was in a consolidation phase. However, as the RSI showed a clear overbought signal in early November, the market was unable to sustain its uptrend and is currently cooling down and consolidating. Despite testing it earlier today, the $2.2 support level is intact, pushing the price higher towards the $3 level. However, a more significant correction towards the $1.5 level is expected if the $2 level is decisively broken.
XRP could rally to test the all-time high resistance level at $3.55 if it breaks the upper boundary of this triangle pattern. On the other hand, a decline below the lower boundary of the trend line could lead to a sharp decline towards the $1.4 support level. If this happens, the 50-day simple moving average (SMA) and the $2 level could act as important support levels.
The Relative Strength Index (RSI) momentum indicator is slightly above its neutral level, suggesting that the bullish momentum is slightly under control. Meanwhile, the crossover is approaching bullish dominance as the Stochastic (Stoch) indicator is just below its neutral level.
SEC Changes Could Boost XRP Price, Stimulate Market
The long-running lawsuit between Ripple and the SEC could take a new turn with Paul Atkins taking over as SEC Chairman from Gary Gensler.
With the January 15 deadline for the SEC to file its XRP lawsuit approaching, many crypto experts and pro-XRP lawyers are hoping for a good outcome for Ripple. If Atkins dismisses or settles the lawsuit, XRP could see significant price gains and an exchange-traded fund could also be created.
XRP/USDSEC’s Shift in Direction Could Boost XRP
Paul Atkins is a cryptocurrency advocate, so he will bring a fresh approach to the SEC especially when it comes to regulating the crypto space. Atkins’ views are more favorable to digital assets than those of Gary Gensler who has been an outspoken critic of the crypto industry.
Many in the industry including XRP advocates like attorneys Jeremy Hogan, Fred Rispoli, and Bill Morgan believe Atkins will dismiss the lawsuit or at least settle it. This new leadership could mean that the SEC will shift from a regulatory-friendly approach to a more collaborative approach with the industry.
With the Trump administration being crypto-friendly, market sentiment is turning positive and expectations are growing for an XRP win. Ripple’s general counsel, Stuart Alderotti, has called on the incoming administration to “wipe the slate clean” of the controversial Hinman era in the crypto space. A clean slate under Atkins would restore some confidence in the SEC and lead to better outcomes for the industry.
Potential XRP Price Surge and ETF Launch
If the lawsuit is dismissed or weakened, XRP could surge to $3 or higher. The lawsuit has been weighing on XRP’s price for a long time but a good outcome could be a massive rally.
XRP Forms Bullish Flag Pattern amid Price Volatility
XRP’s recent price action has revealed a significant lack of movement, with traders caught between key support and resistance levels. Currently trading around $2.24, the digital asset has shown potential for both bearish and bullish developments. This period of consolidation, marked by a bearish flag pattern, often signals that the market is preparing for a decisive turn.
Understanding Bearish Flag Formation in Detail
The bearish flag pattern typically appears during a downtrend, characterized by a brief period of consolidation before continuing lower. In the case of XRP, the pattern is clearly visible on the daily charts, suggesting that as the price stabilizes, bears may be preparing for another attack. Notably, the lack of buying pressure could heighten concerns of a bearish breakout, pushing XRP to lower support levels at $1.69 or possibly $1.38.
While a bearish flag signifies a potential decline, historical data suggests that such periods of low volatility can sometimes herald a bullish breakout. If XRP manages to break above the upper resistance at $2.40, trader sentiment could quickly change, sparking a fresh rally towards its previous highs near $2.80. Thus, against the backdrop of current market sentiment, every trader should be prepared for momentum swings.
The Role of Volume in Predicting Future Price Action
An important aspect of chart analysis during such periods of consolidation is to monitor trading volume. A subsequent spike in volume can signal a strong breakout in either direction, providing a clearer indicator of market sentiment. Low volumes tend to indicate a lack of participation, which can lead to more pronounced price swings. Therefore, it is imperative for investors to remain vigilant for signals of increased volume as they often precede significant trend changes.
