Payments platform Ripple's token, XRP, is finding it tough to break through the $0.8 resistance level with several attempts already in 2022 despite reports of a success in its on going case with US financial regulators.
Instead today (17 January) it is down nearly 4% leaving it more than 25% off its festive peak. XRP put on a bit of a show before Christmas surging up 35% following flash crash around 3 December.
Underlying trading activity is uncertainty rooted in this ongoing court case filed against Ripple in December 2020 by the US Securities and Exchange Commission (SEC). It claims that offering XRP violates regulations on unregistered securities. The latest ruling requires the SEC to produce some documents it has hitherto be reluctant to do so.
The lawsuit has had an impact on XRP trading in the US, but the cryptocurrency remains active on international markets.
Ripple argues SEC cryptocurrency bias
The SEC filed the lawsuit in the US against Ripple on 22 December 2020, alleging that “its offers and sales of XRP violated the registration requirements of Sections 5(a) and (c) of the Securities Act”.
Ripple claimed that the SEC did not provide specific warning that its offering and selling XRP implicated federal securities laws, depriving it of “fair notice”, according to a memorandum of law supporting the SEC’s motion to strike Ripple’s defence.
The SEC stated in the memo that “in 2012, before it sold a single XRP, Ripple’s lawyers told Ripple that the sale of XRP could be deemed a sale of securities under the federal securities laws”.
It added that “from 2013 through 2020, Ripple sold XRP for nearly $1.4bn and almost all of its revenues came from sales of XRP to public and private investors.
Ripple was launched in 2012 as a blockchain-based solution for cross-border payment processing. Siam Commercial Bank (SCB) was the first in Asia to use the Ripple blockchain to process real-time payments for its customers. The platform is also used by wire payments service MoneyGram (MGI), as well as a number of other money transfer services.
In its initial response to the lawsuit in December, Ripple maintained that it was primarily a digital currency, rather than a traded security. The company said:
The company added that the lawsuit unfairly singles out XRP, putting it at a disadvantage to other cryptocurrencies that the SEC has not claimed are securities. The statement said: “XRP is a currency. XRP is similar to bitcoin and ether, which the SEC has determined are not securities.
On 2 August, Bradley Garlinghouse, CEO at Ripple Labs, filed a request for the court to obtain documents from the Binance cryptocurrency exchange (which was banned in the UK earlier this year), as “Mr Garlinghouse’s sales of XRP were overwhelmingly made on digital asset trading platforms outside of the United States”.
He further argued that “the discovery that Mr Garlinghouse seeks will be relevant to demonstrating that the offers and sales that the SEC challenges did not occur in this country and are not subject to the law that the SEC has invoked in this case”.
On 15 October, the SEC requested that the court “extend the expert rebuttal report deadline to November 12, 2021, and the expert discovery deadline from November 12, 2021 to January 14, 2022, to permit the parties sufficient time to prepare rebuttal reports” and call at least 14 expert witnesses. Ripple agreed to extend the report deadline, but it opposed the expert discovery extension. However, that was later granted by the court.
Garlinghouse called on Congress to get involved and create clear regulations for the crypto industry. Ripple's general counsel, Stuart Alderoty, said: "This shouldn’t be a partisan issue, and some in Congress are seeking to take on the mantle. Unfortunately, while the US (as a whole) flounders, other respected economic centres are seizing the advantage – to name just one, the EU with MiCA, taking input from all stakeholders."
This shouldn’t be a partisan issue, and some in Congress are seeking to take on the mantle. Unfortunately, while the US (as a whole) flounders, other respected economic centers are seizing the advantage - to name just one, the EU with MiCA, taking input from all stakeholders. https://t.co/j9RGuxW48Y— Stuart Alderoty (@s_alderoty) November 2, 2021
The lawsuit continues to weigh on the liquidity of the XRP cryptocurrency. The case has prompted many exchanges in the US and some in Europe to delist XRP, causing the coin to shed half of its value in December last year and affecting Ripple projected growth. But XRP is still available for trading on exchanges outside the US, and users continue to buy and sell it.
On 22 December Ripple (XRP) chief executive Brad Garlinghouse raised the rhetoric level about the legal case filed against his company by US regulators claiming it was an attack on crypto in the US, not just on Ripple.
He added that 2021 has been a watershed year for the cryptocurrency industry and Ripple's strongest year yet. “Acceptance and awareness of the opportunity to bring billions of people into the global financial community has never been so clear. It’s been incredible to see a lot less ‘maximalism’, and many more builders joining the industry,” he tweeted.
How has the XRP price been fluctuating?
The XRP price dropped from $0.60 at the end of November 2020 to a low of $0.1748 in December 2020, when the SEC filed the lawsuit. The price then spiked to an intraday high of $1.9600 on 14 April as bitcoin and other cryptocurrencies rallied. That was XRP’s highest level since the previous cryptocurrency rally in January 2018, when it soared to an all-time high of $3.84.
The XRP price fell back in May as cryptocurrency markets crashed, dropping to $0.51 on 22 June, its lowest level since 25 March. The price approached that level again on 20 July, trading down to $0.52 as cryptocurrency markets bottomed out. XRP trended higher over the rest of the summer to reach $1.41 on 6 September, with bitcoin and other cryptos also moving higher over that period.
Cryptocurrency prices fell in late September, although they have subsequently rebounded. XRP traded up to $1.23 on 10 October and has since rested in the $1 to $1.25 range.
XRP started December at the $1 mark, having fallen from a two-month high of $1.35 reached on 10 November. The price fell as low as $0.6145 on 4 December as the broader cryptocurrency markets retreated from early-November highs.
In its response to the lawsuit, Ripple Labs has argued that what drives the price of Ripple is price trends on the broader markets, rather than attempts to affect the price by increasing its liquidity as a security. It said:
While the lawsuit progresses, Ripple Labs continues to work with payments companies to launch financial products and services using the Ripple blockchain and XRP. It’s working with governments in several developing countries to introduce central bank digital currencies (CBDCs) and cross-border remittance services.
What’s the outlook for the XRP price based on the latest Ripple predictions? Could it reach $5?
Ripple price prediction for 2022 and beyond: Where next for the coin?
Technical analysis from CoinCodex was bearish at the time of writing on 17 January. There were five indicators giving off bullish signals compared with 25 bearish signals. CoinCodex’s short-term prognosis for XRP was bearish, predicting that the price could drop further to $0.63 by 22 January.
The Ripple price forecast from algorithm-based site Wallet Investor projected that the average price could move to $1.3 in a year's time and rise to $3.5 in five years.
The XRP forecast 2022 from DigitalCoin put the price at an average of $1.04 for this year and $1.6 in 2025. By 2028, the expected price for XRP could average $2.73.
Looking further ahead, Price Prediction’s XRP price analysis projected that the coin could average $3.75 in 2025 and $25 by 2030.
It’s important to keep in mind that cryptocurrency markets are extremely volatile, making it difficult to accurately predict what a coin’s price will be in a few hours let alone long-term estimates. As such, analysts can and do get their predictions wrong.
We recommend that you always do your own research, and consider the latest market trends, news, technical and fundamental analysis, and expert opinion before making any investment decision. Keep in mind that past performance is no indicator of future returns. And never invest more than you can afford to lose.
Cryptocurrencies are highly volatile assets, making them riskier than other forms of investment. There is heightened uncertainty around the future price of XRP as a result of the ongoing SEC lawsuit. You should evaluate the level of risk you’re prepared to accept before investing. You should do your own research to help you decide if XRP is a suitable fit for your investment portfolio. And never invest money you cannot afford to lose.
There is potential for the XRP price to rise if the court rules in its favour in the SEC lawsuit. However, if the SEC is successful, the price could drop. It’s also important to keep in mind that there’s a plethora of other factors that could affect the XRP performance, such as Ripple’s partnerships, the XRP adoption rate and broader crypto market sentiment
Some forecasting sites predict that XRP could reach $5 in the coming years. In the meantime, it is important to remember that cryptocurrency markets remain highly volatile, and the coin’s price could crash just as quickly as it increases.
Whether you believe those predictions is a decision only you can make. As always, you should be aware that the past price performance is no guarantee of future returns.
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