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The price for XRP, the native cryptocurrency of the Ripple network, shot up on 9 December, heading toward the resistance level of $1, with the cryptocurrency markets under pressure after a recent selloff.
November was not kind to the outlook for XRP. The coin fell from $1.35 to $0.89. It had followed the gains of leading cryptos, like bitcoin (BTC) and ether (ETH), gaining value over the summer to peak in September and again in early November. But unlike the market leaders, XRP failed to recapture the high ground it had found in spring.
Underlying trading activity is uncertainty rooted in the 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 deadline for the exchange of expert rebuttal reports has passed. The deadline for expert discovery has been moved to 14 January 2022.
Ripple CEO Brad Garlinghouse said in an interview with CNBC on 23 November that the case is making “good progress”. He expects that it could reach a conclusion next year.
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.
“Given the historical advice Ripple had received since 2012, questions from market participants on the obvious question of whether Ripple’s offers and sales of XRP required registration under the securities laws, and the SEC’s formal investigation, defendants were aware for many years that the securities laws could apply.”
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 SEC’s theory that XRP is an investment contract ignores the economic reality that XRP is, and has long been, a digital asset with a fully functional ecosystem and a real use case as a bridge currency that does not rely on Ripple’s efforts for its functionality or price.”
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.
“By alleging that Ripple’s distributions of XRP are investment contracts while maintaining that bitcoin and ether are not securities, the Commission is picking virtual currency winners and losers, destroying US-based, consumer-friendly innovation in the process.”
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.
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:
“Extensive data analysis shows that XRP’s price correlates to that of the other leading digital assets – not to Ripple’s announcements or news about its business. The data show that XRP’s price has not been impacted by Ripple’s public announcements which means the market does not believe that Ripple’s efforts translate into an increase in the price of XRP.”
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.
In the most recent XRP news, the company announced agreements with the government of Palau and Bhutan in November and September, respectively.
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 neutral at the time of writing on 9 December, with the XRP price around $0.90. There were 20 indicators giving off bullish signals compared with 11 bearish signals. CoinCodex’s short-term prognosis for XRP was bullish, predicting that the price could increase to $0.973642 by 14 December.
The Ripple price forecast from algorithm-based site Wallet Investor projected that the average price could move to $1.12 by the start of 2022, $1.73 by the end of 2022 and trade at $2.36 by the end of 2023. The price could reach $3.75 by the end of 2025.
The XRP forecast 2022 from DigitalCoin put the price at an average of $1.58 next year and $2.88 in 2025. By 2028, the expected price for XRP could average $4.26.
Looking further ahead, Price Prediction’s XRP price analysis projected that the coin could average $4.02 in 2025 and $26.53 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.
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