Ripple is currently experiencing a bear market, having declined by over 35% from its peak reached in January.
Ripple (XRP) saw gains for the second day in a row as the cryptocurrency market rebounded following positive inflation figures. Many cryptocurrencies advanced, with Bitcoin (BTC) and Cardano (ADA) both increasing by more than 3%.
XRP’s rise was further supported by Franklin Templeton’s application for a spot exchange-traded fund (ETF) on Tuesday.
This asset management firm, overseeing more than $1.5 trillion in assets, has joined a group of other companies, including WisdomTree, Bitwise, 21Shares, Grayscale, Canary, and CoinShares, all of whom have submitted applications for a spot XRP ETF. Users on a prediction market platform have raised the likelihood of XRP ETF approval to nearly 80%.
Additionally, XRP is among the cryptocurrencies identified by Donald Trump that are part of the U.S. digital coin reserves. Should this ETF be approved, it could generate increased demand as the U.S. leverages its strong financial position to acquire these assets.
A significant advantage of XRP is its potential to transform the payment sector, currently dominated by SWIFT. Ripple asserts that its technology surpasses SWIFT’s, with transaction completions taking only a few seconds and incurred costs being lower than those of SWIFT.
A potential driver for growth could be the resolution of the lawsuit involving the Securities and Exchange Commission (SEC). The outcome of this case is likely to allow Ripple Labs to expand its network by adding more banking partners. Among its existing partnerships are firms like Santander, HSBC, SBI Holdings, and Bank of America. The SEC has already dismissed cases against Uniswap, Coinbase, and Kraken.
XRP price technical analysis: will it reach $1 or $3.5 first?
The daily chart indicates that XRP’s price fell to a crucial support level at $1.9275 this week, a level it has managed to maintain since December of last year.
This level has become the neckline of a head and shoulders pattern that has developed since December, with the ‘head’ at $3.4 and the ‘shoulders’ at $3. It has also declined below the 100-day Weighted Moving Average.
Consequently, there is a risk of a bearish breakdown, as the head and shoulders pattern is regarded as a strong bearish signal in the market. A drop below the neckline at $1.9275 would confirm a potential move towards the psychological level of $1, which aligns with the 78.6% retracement level.
Conversely, if the price breaks out bullishly to $3, it would be confirmed by a rise above the right shoulder at $3 and the year-to-date high at $3.4. This move would invalidate the head and shoulders pattern and suggest further upside potential.