XRP Traders Anticipate Recovery Amid SEC Appeal
Ripple's (XRP) price recently fell from $0.63 to $0.52 due to a renewed regulatory battle with the US SEC. However, traders in the derivatives market perceive this as a temporary setback rather than a long-term hindrance, as many are holding positions that predict a rebound for the altcoin. This analysis explores the reasons behind this sentiment and what might be next for XRP.
On Wednesday, the US SEC filed an appeal challenging XRP’s non-security status, which was previously confirmed by a court ruling in July 2023. Following this announcement, XRP’s price dropped, erasing a significant portion of its recent gains.
Initially, traders expressed panic and opted to shorten the token, but data from Coinglass indicates a shift in sentiment. Currently, XRP’s Long/Short Ratio has risen to 2.10, suggesting that more traders are holding long positions than short ones.
This ratio illustrates the balance between long and short positions among traders. A reading under 1 indicates a bearish sentiment, whereas a reading above 1 shows a preference for long positions. In XRP's case, 67.75% of traders are taking long positions, compared to 32.25% opting for shorts. This indicates a prevailing belief in a future rise in XRP’s value as discussions around the SEC appeal progress.
The liquidation heatmap, which identifies potential areas of high liquidity, supports this bullish bias. It reveals price levels where significant liquidations could occur, guiding traders to find optimal liquidity positions. For XRP, these critical regions lie between $0.62 and $0.63, suggesting a potential bounce in value towards these levels.
An analysis of the Bollinger Bands (BB) on the daily chart indicates increased volatility surrounding XRP, as the bands have expanded. The BB also helps identify whether a token is overbought or oversold. Currently, the lower band has hit XRP’s price at $0.52, suggesting that even slight buying pressure could trigger a significant rebound.
Moreover, XRP’s price aligns with the 38.2% Fibonacci retracement level, a potential support area that could facilitate a rebound. If XRP successfully breaks through the $0.58 resistance, a rise to $0.62 may follow. However, if the SEC appeal progresses unfavorably for Ripple, this optimistic prediction could be upended, leading to a potential drop to $0.48.
