XRP rallied an impressive 43.94% from Wednesday’s opening at $0.3936 to a high of $0.5587 on Friday. It has since retreated to $0.4731 and is up 32% over the last seven days, according to data from CoinMarketCap. This is one of the best performances by the cross-border remittances token since the recovery experienced between February 4 and 8.
Let’s analyze the price action after last week’s rally and see what factors could have been behind the impressive performance.
Prospects of A Speedy Conclusion To the Ripple vs. SEC Case
The “XRP Army” is hoping for a favorable ruling in the much-awaited summary judgment in the Ripple vs. SEC lawsuit. Ripple Labs, the company behind XRP, and the U.S. Securities and Exchange Commission (SEC) filed motions for summary judgment on September 18, asserting that there is enough evidence for the presiding judge to make a ruling without the case going to trial.
The SEC and Ripple Labs want the Southern District of New York Judge Analisa Torres to judge whether Ripple violated federal securities laws based on the arguments in the accompanying documents.
According to lawyer James K. Filan – who has been running a commentary of the case on his Twitter page, said that a decision on whether XRP is a security is expected by mid-December. Filan posted another comment on September 24, giving his interpretation of the SEC’s arguments, saying:
“Here’s the SEC’s argument, as I interpret it: ‘We aren’t saying XRP is a security per se. What we are saying is that any purchase of XRP, as a matter of economic reality, is an investment in a common enterprise with other XRP holders and with Ripple.’”
According to his interpretation, Filan believes that the judgment being sought by the regulatory agency incorporates secondary sales. While XRP may not have been issued initially as a security, “there’s no other way to offer or sell XRP EXCEPT as a security.”
Excitement over the news surrounding the case could improve investor sentiment about XRP’s prospects in the long term.
A Significant Support Zone
XRP price recovery wave took it above the 50-day simple moving average (SMA) at $0.3541 and the $0.45 psychological level. The buyers tried to pump the price to $0.6, but they were rejected at around $0.5591. At the time of writing, the international payments token was still trading below $0.5. Bulls were required to flip this level back into support to sustain the recovery.
XRP was trading above a vital demand area stretching from $0.3 to $0.3912. Buyer congestion in the said zone will likely provide the tailwinds required to propel XRP above the $0.5591 resistance level.
Such a move would confirm the start of an uptrend likely to take XRP price above the upper limit of the demand area around $0.6 and then to the $0.695 range high.
The Relative Strength Index (RSI) was positioned in the positive region. The price strength at 65 suggested that the bulls controlled the price.
XRP’s Increasing Open Interest
Further validating the positive outlook for XRP was derivatives data that revealed a bullish bias from professional investors.
XRP’s open interest – the sum of all “open” options contracts that have not expired, been exercised, or physically delivered – stood at $757 million on September 22. This is an 85% % increase from the $310 million over a week ago, according to data from Kaiko.
This uptick in XRP OI options may have contributed to the recent strength displayed by the crypto’s price.