The XRP token, closely associated with blockchain company Ripple Labs, has been on a tear lately, surging 14% in the past 24 hours alone to approach the $1.70 level – heights not seen since April 2021. This impressive rally has outpaced gains in bitcoin and other major cryptocurrencies, extending a month-long run that has seen the price of XRP triple.
Confluence of Bullish Factors Propels XRP Higher
Several fundamental and regulatory developments have aligned to boost investor confidence and drive demand for XRP in recent weeks:
- Republican victories in the U.S. midterm elections in early November renewed optimism for tokens linked to U.S. companies like Ripple Labs, on expectations of a more lenient regulatory environment.
- News in mid-November that Securities and Exchange Commission Chair Gary Gensler plans to step down in January further bolstered hopes for relaxed crypto regulations going forward.
- Open interest in XRP futures has hit record levels above 2 billion tokens (over $2 billion notional), indicating traders are positioning for continued volatility and price momentum.
Ripple Invests in XRP ETP, Fueling Institutional Adoption Hopes
The launch of a money market fund on the XRP Ledger network and Ripple’s plans to invest in the newly rebranded Bitwise Physical XRP ETP (formerly ETC Group Physical XRP) have also fueled speculation of increasing institutional usage and the potential for a U.S.-listed XRP ETF down the line.
Ripple seems to be putting its money where its mouth is by directly investing in XRP investment products. This not only provides an avenue for institutional exposure but demonstrates their confidence in XRP’s long-term value proposition.
– A crypto analyst who wished to remain anonymous
Technical Analysis: Bulls Target $2 as Next Key Level
From a technical perspective, XRP’s decisive break above the $1.50 resistance that had capped rallies since 2021 bodes well for continued upside momentum. Bulls will now look to challenge the psychologically significant $2 level, which if breached, could open the door for a retest of the all-time high near $3.40 set in early 2018.
However, some prudent profit-taking and consolidation would be healthy after such an extended rally, in order to build a more sustainable base for the next leg higher. The 14-day RSI is approaching overbought territory above 70, often a precursor to a short-term pullback or pause.
Regulatory Risk Remains the Elephant in the Room
Despite the growing optimism and bullish price action, XRP’s ongoing regulatory overhang can’t be ignored. Ripple remains locked in a protracted legal battle with the SEC, which alleges that XRP is an unregistered security.
While a potential resolution or even a Ripple victory would likely trigger an XRP price explosion, an adverse ruling could deal a heavy blow. Traders need to weigh this binary risk against the token’s impressive upside potential in the months ahead.
At the time of writing, XRP was trading around $1.66, up over 14% on the day and nearly 200% in the past 30 days. The token currently boasts a market capitalization of over $80 billion, making it the 6th largest cryptocurrency.
