Will the SEC’s new requirements for Ripple hinder XRP price from targeting $0.7?

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XRP price is rising after establishing support over the past few days. As recovery buds, the payments ecosystem is facing headwinds from the U.S. Securities and Exchange Commission (SEC), causing the community to shift attention away from its desire for exchange-traded funds (ETFs).

XRP Price Faces Legal Trouble With Ripple

After the SEC approved 11 Bitcoin spot ETFs, the Ethereum and XRP communities began to envision the possibility of ETH or XRP spot ETFs. Steven McClurg, chief information officer of Valkyrie Funds, said it wouldn’t be surprising to see an ETH or XRP ETF, which inspired this line of thinking.

Elsewhere, the U.S. SEC has issued subpoenas against Ripple since the agency first filed its complaint, issuing motions to force the payments company to submit financial reports for 2022-2023 as well as contracts governing the sale of XRP to the agency. It noted that Judge Analisa Torres previously defined institutional sales as sales and issuances of unregistered securities in the period prior to the complaint.

#XRPCommunity #SECGov v. #ripple #ripplecoin this @SECGov Motion to compel filed @ripple Preparation of (a) 2022-2023 Financial Statements; (b) Post-Complaint Contracts which govern “Institutional Sales”.https://t.co/Egc4wpf7UY

— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) January 11, 2024

Additionally, the SEC said that after the SEC filed its complaint, it sought to require Ripple to respond to a single interrogatory (i.e., formal written questions) regarding the proceeds of the institutional sale, but with respect to the contract they entered into prior to the complaint.

The SEC said these two types of documents and interrogatories will help Judge Torres determine whether the court should impose relief, including injunctions and civil penalties, and the amount of civil penalties that may apply.

Ripple argued that it would not face an injunction because its future sales of XRP would not be subject to securities and registration laws. The SEC countered that the financial information it requested was “necessary to develop penalties to deter future violations.”

XRP Price Outlook

XRP price appears to have bottomed after the support at $0.544 was activated. The RSI moving north shows bullish momentum, while the Momentum Oscillator (AO) histogram is flashing green indicating bulls are trying to take the lead.

Increased buyer momentum could lead to Ripple price breaking through the key resistance levels provided by the 25-day and 50-day exponential moving averages (EMA) at $0.601 and $0.606 respectively. Further north, upward momentum may help XRP overcome resistance at the descending trendline and gather sell-side liquidity around the psychological $0.70 level. This move would be a 15% increase from current levels.

XRP 1 day price chart. Source: TradingView

Conversely, if traders who suffered losses in the January 2 crash choose to exit the market after breaking even, XRP price may decline, with a fall below the $0.544 support sending the price into the abyss. This could push the price of XRP lower, possibly even to the mid-point of the fair value gap (FVG) of $0.50. A breakout and close below this level would confirm the continuation of the downtrend.