XRP Jumps 0.08% to $0.4972 Despite Ongoing SEC Lawsuit: Key Takeaways for Traders
The price of XRP, the native token of the XRP Ledger, rose slightly by 0.08% over the past hour to $0.4972 at the time of writing. However, XRP remains down 1.89% over the past 24 hours and 5.05% over the past 7 days. The token has seen more significant declines over the past month, dropping 28.59% amid an ongoing lawsuit from the SEC alleging that XRP is an unregistered security.
Despite the legal issues, XRP trading volume over the past 24 hours remains strong at $855.61 million. This shows that significant interest in the token still exists even with the lawsuit hanging over its head. XRP also boasts a large market capitalization of $26.32 billion, making it one of the largest cryptocurrencies by market cap.
The slight hourly gain shows that bulls are attempting to regain control of the XRP market. However, bears have dominated in recent weeks, pushing the price lower. XRP faces several key resistance levels on the path back upwards. These include the 50-day moving average around $0.51, the 100-day moving average around $0.55, and the key psychological resistance at $0.60.
On the flip side, XRP has strong support around the $0.45 level. This price area provided support several times in early 2022. If the bears push the price below this level, XRP could quickly fall further to retest the 2022 low around $0.30.
Ongoing SEC Lawsuit Creates Uncertainty
The biggest overhang weighing on XRP is the lawsuit from the SEC. The regulator alleges that XRP is an unregistered security issued by Ripple Labs. Ripple counters that XRP is an independent digital asset, similar to Bitcoin and Ether.
This lawsuit has dragged on for over two years without a clear resolution in sight. The uncertainty has made some exchanges delist XRP, while preventing the token from retesting its all-time high near $3.50. Until regulators provide clearer guidance on XRP's status, the token likely faces difficulty rallying substantially.
However, Ripple has scored some small legal victories recently that could be positive signs. In December 2022, the judge denied the SEC's request to protect internal SEC communications on Bitcoin and Ether from discovery. This opens the door for Ripple to gain access to documents that could support its argument that XRP deserves similar treatment.
The lawsuit remains a critical risk factor hanging over XRP in the short term. But if Ripple ultimately prevails, it could remove the legal uncertainty and allow XRP to retest its former highs. Traders should closely watch the case for any developments that could impact price action.
XRP Use Cases Keep Growing
Despite the lawsuit, development on the XRP Ledger continues. In 2022, the network processed 36.3 million transactions, up 23% from 2021. Network transaction fees also increased 44% to $108 million. This shows that actual utility on the XRP Ledger is expanding regardless of the lawsuit.
Use cases for XRP span several areas including cross-border payments, NFTs, and DeFi. For example, Ripple continues to partner with financial institutions like banks and payment providers to facilitate faster cross-border transactions using XRP.
XRP also aims to serve as a bridge currency allowing faster conversions between different currencies. With its speed and low transaction costs, XRP makes an ideal bridge for global payments and currency exchanges.
Additionally, XRP is gaining traction in emerging areas like NFTs and decentralized finance. For instance, XRPL Labs launched an NFT marketplace running on the XRP Ledger called Beta Labs. And projects like Nebeus are bringing decentralized lending and exchanges to XRP.
As real-world utility expands, it strengthens the argument that XRP is more akin to Bitcoin and Ether rather than an unregistered security. Traders should watch for growing use cases as a bullish sign for the token's future should the lawsuit resolve favorably.
XRP Long-Term Price Prediction
Looking ahead, the biggest price driver for XRP remains the SEC lawsuit. A positive resolution confirming XRP's cryptocurrency status could allow a rally back to the $3.00-$3.50 range where the 2018 highs sit. This would require a favorable legal outcome along with resumption of XRP trading at major exchanges.
However, predictions remain difficult given the lawsuit uncertainties. If the SEC prevails, XRP may fail to regain former highs and remain constrained below $1.
But even without a full legal victory, incremental wins for Ripple in court may lift uncertainty and allow XRP to trade higher. In that scenario, XRP could possibly return to the $1.50-$2 zone in 2024 or 2025. But reaching its record highs likely hinges on Ripple conclusively winning the legal battle.
Until then, traders should watch for XRP to hold support around $0.45 and consolidate between $0.45-$0.60 while the lawsuit plays out. A break below $0.45 risks a steeper drop toward the 2022 lows around $0.30. To the upside, XRP must break the psychological $0.60 level to open the door for a retest of $1.
Can XRP Reach $5 This Year?
Given the headwinds from the SEC lawsuit, XRP reaching $5 in 2023 seems highly unlikely. For XRP to reach $5, the coin would need a 900% rally from its current price of around $0.50.
While crypto can see explosive rallies during bull markets, XRP faces too many challenges in the near term to plausibly gain 900% in a year. The SEC lawsuit continues to weigh heavily, preventing major exchange relistings.
Additionally, the broader crypto market remains mired in a bear market. Bitcoin would likely need to regain its own all-time highs above $68,000 to provide the rising tide for altcoins like XRP. However, Bitcoin shows little sign of returning to record highs this year.
The most bullish scenario would entail Ripple winning a complete legal victory over the SEC in 2023. This could trigger a rally toward the $3 zone but likely not as high as $5 this year. Reaching $5 would require everything to break positively including the lawsuit, exchange relistings, and an extremely bullish crypto market.
While unlikely in the next 12 months, XRP could possibly reach $5 in the next 3-5 years. This assumes the SEC case concludes in Ripple's favor and utility and adoption greatly expand. But for 2023 specifically, traders should remain cautious on $5 projections for XRP given the difficult roadblocks.
Is Now the Time to Invest in XRP?
The ideal time to invest in XRP remains an open question given the unclear SEC lawsuit outcome. On the one hand, the ongoing legal issues have depressed XRP's price substantially from its all-time high. This makes the token relatively affordable for investors wanting exposure.
However, investing now also carries additional risk from the lawsuit. If the SEC wins, XRP could potentially face a steeper sell-off as exchanges may need to delist it entirely in the U.S. This downside possibility presents a challenging risk/reward calculation.
As a result, conservative investors may prefer to wait for greater legal clarity before investing in XRP. That said, aggressively bullish traders might look to gain upside exposure now despite the risks. The optimistic scenario of a Ripple legal victory provides the possibility for an explosive move higher if it occurs.
One potential strategy is dollar cost averaging into a position over time instead of investing all at once. This allows gaining exposure in case XRP rallies while limiting downside risk if the token drops further. Traders should consider their risk tolerance and thesis on the legal outcome before deciding if now is the right entry point.
In conclusion, XRP faces a critical inflection point with the SEC legal battle acting as the key driver of future price action in both the short and long term. While use cases are expanding, legal uncertainties have depressed price substantially from all-time highs. However, a definitive court victory for Ripple could quickly transform the outlook and lift XRP back towards record levels. Traders eyeing exposure must carefully weigh the risks around the lawsuit against the large upside potential from a favorable resolution.
