Ripple was one of the biggest losers this week as its own cryptocurrency, XRP, fell about 13 percent.
XRP / USD fell to $ 0.44 during the early European session. The downhill movement took cues from two basic principles. The first was a broader correction trend in the cryptocurrency market that saw other top coins, including Bitcoin and Ethereum, in a similar downward trajectory.
The second fundamental point was Ripple’s potential to face a potential US Securities and Exchange Commission lawsuit over its XRP sales. Traders saw the news as their cue to ditch their XRP holdings as they corrected lower from the top of $ 0.79 since the start of the year.
The Ripple token plunges after the SEC news hit the wire. Source: XRPUSD on TradingView.com
When the news got around Ripple expected to be sued by the SEC, social volume for XRP understandably exploded for crypto‘s # 3 market cap asset,’ noted data analytics firm Santment. “There has also been an increase in the number of tokens being moved to exchanges as prices have fallen -17% in the past day.”
Ripple inflows to exchanges picked momentum after the SEC news. Source: Santiment
The SEC lawsuit revolves around whether Ripple Labs did something illegal while selling its XRP token to raise money for its blockchain platform in 2017, a move that would view the entire event as a securities sale.
Ripple currently owns $ 6.4 billion XRP directly. The San Francisco-based company has also locked up 48 billion XRP in bail, which it periodically sells to the public.
XRP Still Bullish?
XRP now forms a Bull Flag. Traders interpret it as a bullish continuation pattern that follows a short pause after a sharp price move higher. The pattern appears as a downward sloping channel / rectangle, confirmed by two parallel trend lines against the previous trend.
Ripple's bull flag formation in play. Source: XRPUSD on TradingView.com
XRP / USD should technically attempt to break above the flag’s upper trend line to continue the uptrend. Should such a move occur, the pair could grow with the height of the flagpole forming in front of the flag itself. The high is 0.27, making XRP / USD on the way to a minimum of $ 0.8 in the coming sessions.
Meanwhile, if the price deviates from its Flag top by more than 50 percent, it could invalidate the entire bullish continuation theory.