Why is XRP Price Rallying Today?

XRP price shot up 48% after the long-standing battle between the US Securities and Exchange Commission (SEC) ended in favor of Ripple. This massive spike took place between August 6 and 7 but failed to surpass the $1 psychological level. Ripple’s Chief Legal Officer, Stewart Alderoty, further fueled optimism by stating on Thursday that the SEC has only a 10% chance of winning an appeal if it decides to pursue one. This remark likely intensified bullish sentiment among XRP investors.

Currently, XRP has increased by 0.2% in the last 24 hours, trading around $0.566.

Why XRP Price is Shooting Higher

As of 8:21 a.m. UTC, the price of XRP seems to be breaking out of a falling wedge, a move that might be accompanied by a 9% surge to the previous monthly high of $0.625.

Since August 7, the Ripple price has been consolidating within a falling wedge pattern. Falling wedges often suggest a potential bullish reversal, especially if they appear after a significant downtrend. 

Nevertheless, as indicated by the 50-period EMA, the overall trend remains slightly bearish. The XRP price may find some resistance at $0.5835 and $0.6228, which are aligned with previous highs and the top of the descending wedge.

The relative strength index (RSI 14) is currently around neutral at the mid-level, indicating the market is neither overbought nor oversold, giving no strong bias for immediate upward or downward movement. 

However, it shows some recovery from the previous oversold conditions, possibly supporting a bullish breakout.

The price action is wedged between the 21 and 50 EMA, showing indecision in the market. If there is no considerable spike in volume to validate the breakout, the price of XRP may continue to range outside the falling wedge.

If the price breaks and sustains above the 50 EMA, it could indicate market strength and a shift in momentum toward the upside.

If bears prevail and the asset fails to break out, it may signal weakness in the market, resulting in a 5% drop to the bottom of the falling wedge. This may invalidate the current bullish thesis, setting new targets lower at $0.5156 and $0.4951.

Futures Traders Buying XRP Aggressively

XRP Futures traders may be driving up the recent XRP price action. The Ripple-SEC lawsuit outcome is still fresh on the markets and may drive the bullish sentiment observed in the price chart.

A key metric to watch in this context is the funding rate, which provides insight into the market dynamics.

The funding rate shows the cost paid by one side of the market to the other to hold their positions open and subsequently sheds light on market sentiment. Between August 13 and 15, the funding rate of XRP increased from  0.00039% to $0.00069%.

Despite the increase, the XRP price dropped 5.48% over the same period. This divergence shows that while spot traders are becoming more cautious, futures traders are preparing the market for a potential strong upswing.

While XRP struggles to break above the current $0.56, underlying bullish factors indicate a potential upward breakout with a focus on $0.62 as the next major resistance to test.

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Evans Karanja

Evans Karanja is a content writer and scriptwriter with a focus on crypto, blockchain, and video gaming. He has worked with various startups in the past, helping them create engaging and high-quality content that captures the essence of their brand. Evans is also an avid crypto trader and investor, and he believes that blockchain will revolutionize many industries in the years to come. When he is not writing, you can find him playing video games or chasing waterfalls.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.