XRP price made a bearish breakout on Tuesday after the Securities and Exchange Commission (SEC) appealed a 2023 court ruling. Ripple also dropped to a low of $0.5275, much lower than the September high of $0.6657.
Ripple faces headwinds
The XRP token has crashed as the Ripple network faces major headwinds. First, the SEC decided to appeal a ruling made last year that said that XRP was not a security. If the agency wins this appeal, then it means that many exchanges may decide to delist in.
There are also rumours that the SEC will appeal a recent ruling in which Ripple Labs was forced to pay a $125 million fine, much lower than the $2 billion that the SEC was asking for.
The other big challenge Ripple Labs is facing is that XRP Ledger, which is its Ethereum alternative, is not gaining traction among developers and investors.
Data compiled by DeFi Llama shows that the network has attracted only 3 dApps with a total value locked (TVL) of over $14.6 million. Most of these funds are in Ripple’s own XRPL DEX, and their amount has held steady in the past few weeks, meaning that it is not seeing any activity.
In contrast, many newer chains are thriving. For example, Base Blockchain, which was launched in 2023, has become the third-biggest player in the DEX industry as its dApps handled over $6.3 billion in the last seven days. It has also become the biggest layer-2 network in the industry, beating the likes of Polygon and Arbitrum.
There is a risk that Ripple’s stablecoin, RLUSD will also not do well since the industry is highly saturated. Tether has over $120 billion in circulation while USD Coin and DAI have $34 billion and $5 billion. PayPal’s PYUSD has not gained a major market share as its assets remain at $638 million.
XRP price analysis
XRP chart by TradingView
The daily chart shows that the Ripple price formed a double-top chart pattern at $0.6657. In most periods, this is one of the most bearish patterns in the market. Most importantly, it has formed a bearish flag chart pattern, another bearish sign.
XRP is also nearing a death cross when the 200-day and 50-day Weighted Moving Average (WMA) cross each other. Therefore, there is a risk that the token will have a bearish breakout as sellers target the next psychological point at $0.50.
