Mixed sentiment in the cryptocurrency market

1:58 PM December 28, 2020
  • Ripple slipped to fourth place in the global cryptocurrency market rating
  • Cryptocurrency exchanges continued delisting Ripple due to the lawsuit filed by SEC
  • Bitcoin hits a new all-time high

Investment in cryptocurrencies has boomed this year, taking the price of tokens such as Bitcoin to record highs. Ripple, a smaller competitor, traded at 2-½ year highs as recently as a month ago. However last week price dropped over 50% after SEC charged Ripple Labs and its initial and current CEOs, Christian Larsen and Bradly Garlinghouse with conducting $ 1.3 billion unregistered securities offering. The complaint alleges that Ripple raised funds, beginning in 2013, through the sale of digital assets known as XRP in an unregistered securities offering to investors in the U.S. and worldwide. According to SEC, Ripple executives failed to register their offers and sales of XRP or satisfy any exemption from registration, in violation of the registration provisions of the federal securities laws. Larsen and Garlinghouse also individually sold significant volumes of XRP  and SEC contends they “aided and abetted” Ripple in its sales. They used the obtained funds to finance the company's operations. Ripple's CEO, Bradley Garlinghouse, said the SEC hadn't given the company "clarity" on whether its XPR offering is classified as a currency or security. "To be clear, this is all based on their illogical claim that XRP is, in their view, somehow the functional equivalent of a share of stock," Garlinghouse wrote on Ripple's company blog. Ripple management also points the fact that Treasury Department’s FinCen, have already determined that XRP is a currency. A decentralization problem also arises here. Unlike Bitcoin or Ether, which are widely held by persons scattered around the globe, most of XRP continues to be owned by the company that created it and has significant influence over which nodes will serve as trusted validators for transactions. Citing the SEC's decision to sue Ripple, many cryptocurrencies exchanges including  OSL, Beaxy, CrossTower and most importantly Bistamp started delisting XRP and suspending XRP trading. There is a risk that other major exchanges may soon follow the lead in order to avoid penalties for allowing retail consumers to trade an unregistered security. Also, if XRP is eventually considered a security, then it could make it unavailable for sale to most exchanges and industry participants.

The Bistamp's decision halted Ripple's upside correction and pushed the price back below the psychological $0.30 level, which coincides with 200 SMA (red line). Bulls need to break above it to improve the short-term technical picture. The major resistance lies $0.45. A sustainable move above this area would mitigate the selling pressure and bring the recovery back on track with the next focus on key $0.5 and $0.61 levels. However as long as price sits below the aforementioned 0.30 level, further downward move is possible, towards support at $0.20. Source: xStation5

 

Meanwhile, the situation looks completely different in the case of Bitcoin. The most popular digital asset retreated from the fresh all-time high at $28,296, and crashed to $25,800 in a matter of hours amid massive profit-taking. Currently Bitcoin is trying to recover, however, a sustainable move above $27,000 is needed to improve the immediate technical picture and bring the recovery back on track. Meanwhile Bitcoin's dominance index jumped above 70% for the first time since March 2017 and market capitalization rose to $515 billion, making the coin more expensive than Visa. According to Asset Dash, now it takes 11th place among the biggest global assets, behind such giants as Facebook, Apple, and Tesla, which may suggest further upward potential.

Bitcoin H4 interval. Source: xStation5

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