Crypto Updates

XRP price risks 30% decline despite Ripple’s legal win prospects

XRP price risks 30% decline despite Ripple's legal win prospects

XRP pricewas wobbling between profits and losses on Sep. 19 despite hopes that Ripple would eventually win its long-running legal battle against the U.S. Securities and Exchange Commission (SEC).

Fed spoils SEC vs. Ripple euphoria

The XRP/USD pair dropped by over 1% to $0.35 while forming extremely sharp bullish and bearish wicks on its Sep. 19 daily candlestick. In other words, its intraday performance hinted at a growing bias conflict among traders.

XRP/USD daily price chart. Source: TradingView

The indecisiveness could be due to XRP’s exposure to catalysts other than the SEC vs. Ripple lawsuit. Namely, the Federal Reserve’s potential to increase its benchmark interest rates by another 75 or 100 basis points in their policy meeting on Sep. 20.

As Cointelegraph reported, fears of aggressive rate hikes have pressured the crypto market lower throughout the year, including Bitcoin (BTC) and Ether (ETH). XRP is also not immune, given the token’s consistently positive correlation with Bitcoin since October 2021.

XRP/USD and BTC/USD daily correlation coefficient. Source: TradingView

For instance, XRP’s daily correlation coefficient with Bitcoin on Sep. 19 was 0.47. A reading of 1 means that the two assets move in lockstep.  

XRP price in danger of going under $0.25 in Q4

Independent market analyst Cheds highlighted that XRP has been fluctuating inside a rectangular range since June, adding that “there’s nothing to be excited about” at present.

The range is defined by $0.38-$0.40 acting as resistance and $0.28-$0.30 acting as support. XRP’s price dropped after testing the resistance and, as of Sep. 19, was heading toward the support area, as shown below.

XRP/USD daily price chart featuring head-and-shoulders setup. Source: TradingView

Interestingly, a move toward the rectangular range support could also trigger a classic bearish reversal pattern called the head-and-shoulders, defined by three consecutive peaks forming atop a common support level, with the middle peak (head) higher than the other two (left and right shoulders).

Related: Ether staking could trigger securities laws — Gensler

A head-and-shoulders pattern resolves after the price breaks below its support line and falls by as much as…

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