- XRP investors increased their total realized profits since the beginning of the week to $2 billion.
- Bullish sentiment surrounding its potential inclusion in the US strategic crypto reserve helped XRP record gains despite heavy profit-taking.
- XRP could tackle the $2.95 resistance if it holds the upper boundary of a descending channel as support.
Ripple’s XRP managed to record gains on Thursday despite investors expanding their total realized profits to about $2 billion since the beginning of the week.
XRP investors continue to take profit amid potential inclusion in US crypto reserve
Several XRP investors resumed distributing their holdings following its recent rise. Investors booked over $700 million in profits on Wednesday, stretching the total realized profits since the beginning of the week to nearly $2 billion.
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XRP network realized profit/loss. Source: Santiment
Most of the distribution came from coins that investors last moved between 90 days to 180 days. Coins last moved within the 1 to 2-year cohort accounted for only a small percentage of the selling activity.
The selling is also visible across whales holding between 10M-100M XRP, who have depleted their supply by over 260 million XRP in the past 24 hours.
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XRP supply distribution. Source: Santiment
Despite the huge profit-taking, XRP has managed to hold up well, noting a 4% gain on Thursday, as most investors remained buoyed by bullish sentiments from its potential inclusion in the US crypto strategic reserve.
An inclusion in the reserve will signal an end to the long-standing headwind of its five-year legal battle with the Securities and Exchange Commission (SEC). It could also boost the chances of the agency approving XRP ETF applications. Six asset managers have filed for an XRP ETF, including Bitwise, Grayscale, Canary Capital, CoinShares, WisdomTree and 21Shares.
XRP could tackle $2.95 resistance if it holds descending channel’s upper boundary
XRP sustained $13.33 million in futures liquidations in the past 24 hours, per Coinglass data. The total amount of liquidated long and short positions accounted for $7.50 million and $5.83 million, respectively.
XRP moved above the upper boundary of a descending channel and aims to tackle the resistance near $2.72. This resistance is strengthened by the 50-day Simple Moving Average (SMA).
XRP/USDT daily chart
If XRP reclaims the $2.72 level, it will face a critical resistance near $2.95 — a level where bears mounted heavy selling pressure following XRP’s rally on Sunday.
However, a rejection near $2.72 could send XRP toward $2.24 if the upper boundary of the descending channel fails to hold as support.
The Relative Strength Index (RSI) and Awesome Oscillator (AO) are slightly above their neutral levels, indicating a mild dominant bullish momentum.
SEC vs Ripple lawsuit FAQs
It depends on the transaction, according to a court ruling released on July 14, 2023: For institutional investors or over-the-counter sales, XRP is a security. For retail investors who bought the token via programmatic sales on exchanges, on-demand liquidity services and other platforms, XRP is not a security.
The United States Securities & Exchange Commission (SEC) accused Ripple and its executives of raising more than $1.3 billion through an unregistered asset offering of the XRP token. While the judge ruled that programmatic sales aren’t considered securities, sales of XRP tokens to institutional investors are indeed investment contracts. In this last case, Ripple did breach the US securities law and had to pay a $125 million civil fine.
The ruling offers a partial win for both Ripple and the SEC, depending on what one looks at. Ripple gets a big win over the fact that programmatic sales aren’t considered securities, and this could bode well for the broader crypto sector as most of the assets eyed by the SEC’s crackdown are handled by decentralized entities that sold their tokens mostly to retail investors via exchange platforms, experts say. Still, the ruling doesn’t help much to answer the key question of what makes a digital asset a security, so it isn’t clear yet if this lawsuit will set precedent for other open cases that affect dozens of digital assets. Topics such as which is the right degree of decentralization to avoid the “security” label or where to draw the line between institutional and programmatic sales persist.
The SEC has stepped up its enforcement actions toward the blockchain and digital assets industry, filing charges against platforms such as Coinbase or Binance for allegedly violating the US Securities law. The SEC claims that the majority of crypto assets are securities and thus subject to strict regulation. While defendants can use parts of Ripple’s ruling in their favor, the SEC can also find reasons in it to keep its current strategy of regulation by enforcement.
