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XRP hits 13-month high versus Bitcoin with 35% daily surge — But is a correction inevitable?

XRP hits 13-month high versus Bitcoin with 35% daily surge — But is a correction inevitable?

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Decked:

  • The XRP Rally
  • Reconciliation rumours
  • XRP sharks and whales

XRP price rose sharply against Bitcoin (BTC) on continued optimism between San Francisco-based blockchain payments company Ripple and the US Securities and Exchange Commission (SEC).

Settlement rumors fuel XRP price boom

On September 23, the XRP/BTC pair rose to 0.00002877 – the best level in 13 months – from 0.00002132, a 35% price rally against Bitcoin in one day. At the same time, XRP gained as much as 42% against the US dollar during the same period.

Daily XRP/BTC and XRP/USD price chart. Source: TradingView

Large price increases in the XRP market began to be seen after Ripple and the SEC filed motions with the court on September 12 for summary judgment in their ongoing legal battle over allegations that Ripple hcommitted securities fraud.

In other words, Ripple and the SEC agreed that the court should use the available evidence to make a judgment on whether the blockchain company illegally raised funds by selling XRP by December 2022, thus avoiding a trial.

The price of XRP is up about 75% and 60% against Bitcoin and the dollar, respectively, since Ripple’s lawsuit, fueling optimism that Ripple could win.

The buying sped up even more when Ripple CEO Brad Garlinghouse suggested the same in a recent interview with Fox Business on September 22nd.

Garlinghouse:

“People are realizing that the SEC is really over the top and they’re not going to be loyal to the law when they’re going after the bottom line […] The SEC has kind of lost its way.

Buying XRP sharks and whales since 2020

The increase in prices is also due to the fact that rich investors have been steadily collecting XRP tokens since May.

Entities holding between 1 and 10 million XRP tokens – that is, sharks and whales – have collectively increased their share to 6.35% as of September 23, 2022, up from 5.43% as of December 31, 2020. Santiment, who stated:

“Active shark and whale addresses worth $1-10 million XRP have been piling up since late 2020.”

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Active XRP shark and whale addresses. Source: Santiment

Meanwhile, the period under review also saw entities holding more than 10 million XRP tokens reach an all-time low of 70.75% of the current supply.

Pain in front?

It seems that traders have bought into the rumor ahead of the Ripple vs. SEC decision. But while it remains to be seen whether this will then turn into “sell the news” depending on the outcome of the decision, XRP’s technical data points to a possible correction.

XRP in particular has already become an overbought asset compared to Bitcoin and the dollar.

Related: Overall crypto market cap shows strength even after merger and Federal Reserve rate hike

The XRP/BTC Relative Strength Index (RSI) reached near 85 on September 23, well above the overbought 70 threshold that typically precedes a strong price correction or consolidation.

XRP/BTC has already recovered almost 10% from its 13-month high, as shown in the chart below. The pair is now testing 0.00002601 as its short-term support which, if broken down, could see it test 0.00002079 as its primary downside target or a 20% drop from current levels by the end of the year.

blank
XRP/BTC daily price chart. Source: TradingView

Meanwhile, XRP is seeing a similar sharp correction against the dollar after crossing paths with multi-month descending trendline resistance as shown below.

blank
XRP/USD three-day price chart. Source: TradingView

An extended pullback from trendline resistance could see XRP test near-term horizontal trendline support as the next downside move. In other words, the XRP/USD pair could fall to $0.31 by the end of 2022, which is almost 40% less than the September 23 price.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risks, you should do your own research when making a decision.

*This article originally appeared on Cointelegraph

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