- XRP price breaks several significant resistance levels during last week’s 65% spike, transforming them into pivotal support.
- Daily Active Addresses (DAA) metric continues higher after signaling a bullish Golden Cross pattern at the end of July.
- XRP is not a traditional security under the Digital Asset Market Structure and Investor Protection Act.
XRP price closed last week with the largest weekly return since the beginning of April, unlocking it from the resistance associated with the strategically important 200-day simple moving average (SMA) and propelling Ripple not only through the psychologically important $1.00 but also through the 38.2% and 50% Fibonacci retracement levels. The buying stampede has created credible layers of support that should withstand any profit-taking resulting from the burst higher. Furthermore, it has placed XRP price in a constructive position to climb higher moving forward.
XRP price reasserts relative strength in the cryptocurrency complex
From March 8 until April 26, XRP price was a relative leader in the cryptocurrency complex, raising the Ripple market dominance by 187% from 1.14% to 3.28%. Last week’s rush higher reasserted XRP price leadership and put its market dominance back above the 50-week SMA.
XRP percentage of the cryptocurrency market
More importantly, the race higher reclaimed the critically important $1.00, a level that had been support in the early stages of the significant correction and then resistance at the end of May after the collapse during the month. Ripple also quickly overcame the 38.2% retracement at $1.06, which aligns with several highs in late May and early June.
With $1.00 and $1.06 now combining as support, XRP price is well-positioned to deflect a wave of selling pressure inspired by profit-taking or a reversal in the broader cryptocurrency market. Moreover, Ripple is now unchallenged until the 78.6% retracement at $1.65, which corresponds with a series of highs printed in the first half of May and represents a 40% return from the current price of $1.17.
XRP/USD daily chart
In one week, XRP price transformed the charts on several timeframes, recovered several layers of compelling support and reclaimed the 50-week SMA for the market dominance reading, establishing Ripple as a new relative strength leader with the momentum to reach higher prices in the days and weeks ahead.
Unique addresses pick up interaction with XRP, confirming price gains
In July, the number of unique addresses in daily XRP transactions declined to late November 2020 levels using the 7-day and 30-day moving averages (MA). It signified that there was marginal crowd interaction (or speculation) with the digital token.
The Ripple outlook began to change towards the end of July when the 7-day MA crossed above the 30-day MA, triggering an on-chain metric Golden Cross pattern and raising the probability that the new rally off the July low was more than just an oversold bounce like at the end of June or the end of May.
The Daily Active Addresses (DAA) spiked higher last week, showing a new commitment and emotion for Ripple and, as a result, strengthening the credibility of the new rally to transform into a sustainable advance that will not only test the April high of 1.96 but also put XRP price within striking distance of the all-time high of $3.30.
XRP daily active addresses (DAA) – Santiment
Lack of clarity over asset definition may be the key
In the legal stand-off between Ripple and the Securities and Exchange Commission (SEC), Ripple has contended that there was no proper guidance or definition for cryptocurrencies at the time. Therefore it is not subject to the same securities law as a stock, for example.
The SEC is focused on the marketing of XRP. More specifically, the fact that Ripple marketed XRP as a security. Thus the company and the individual defendants directed an unregistered securities offering when it offered $1.3 billion in XRP, starting in 2013.
The Digital Asset Market Structure and Investor Protection Act notes that the “current digital asset market structure and regulatory framework is ambiguous and dangerous for investors and consumers.” It substantiates Ripple’s claims that due to the lack of clarity within the digital asset space, it never received a timely notice that XRP could be classified as a security.
As the current legislation is written in the Digital Asset Market Structure and Investor Protection Act, XRP will not fall under the definition of a Digital Asset Security. Instead, the digital token would be defined as just a Digital Asset, therefore free from the supervision of the SEC. XRP would be subject to regulation by the Commodity Trading Commission.
In terms of applying the new legislation, many legal commentators contend that the new legislation will be applied retroactively, putting Ripple in a more comfortable position to get the SEC case thrown out.
XRP price has overcome several technical challenges on the charts and renewed interest in the token that is fundamental to transforming a rally into a sustainable advance. Moreover, with the new legislation tilted towards the Ripple argument, XRP price has the potential to extend the 40% move to the April high into a new all-time high in an impulsive form, generating a 180% gain from the current price.
Here, FXStreet’s analysts evaluate where Ripple could be heading next as it seems primed for a pullback before higher highs.
Read More: Three reasons why XRP price will reach $3.30