Discover the compelling reasons behind Ripples XRP being susceptible to a bearish breakdown
Ripple’s digital currency, XRP, has bounced back from its low point of $0.5078 on October 3rd following the announcement of its new stablecoin tied to the US dollar. Currently trading at $0.5500, XRP’s market capitalization stands at $31.2 billion, making it the seventh-largest cryptocurrency in the market. However, XRP has not performed as well as other cryptocurrencies this year, experiencing a 6.3% decline. In contrast, Bitcoin has seen a 54.4% increase, while Pepe has surged by almost 800%.
Despite this underperformance, Ripple has achieved significant milestones throughout the year. The company was fined a mere $125 million in its ongoing lawsuit with the Securities and Exchange Commission, a considerably lower amount than the initial request of $2 billion. Additionally, Ripple has recently launched its RLUSD stablecoin, aiming to compete with established players such as Tether, Circle, and PayPal. The stablecoin will initially be available on platforms like Uphold, Bitstamp, and MoonPay.
Stablecoins have proven to be a lucrative business model in the financial services industry, as demonstrated by Tether’s impressive earnings. Recent filings have revealed that Tether is more profitable than Blackrock, a firm managing assets worth over $11 trillion. Stablecoin issuers generate revenue by investing their funds in low-risk assets like Treasuries. However, new issuers face the challenge of competing with Tether, which boasts $120 billion in assets. For example, PayPal’s PYUSD has only $632 million in assets, making it the ninth-largest stablecoin.
In addition to its stablecoin venture, Ripple has introduced the XRP Ledger, an open-source blockchain designed to provide a superior alternative to Ethereum and Solana. Although the ledger initially experienced strong growth, the total value locked in the network has now stagnated at approximately $14.6 million. However, data from Santiment reveals that the number of wallets on the chain has recently increased.
Looking at the XRP price chart, it is evident that the token has been gradually rising this month. However, on the daily chart, it has dipped below the Ichimoku cloud, which is considered a bearish indicator. Furthermore, XRP has formed a bearish flag pattern, characterized by a long flagpole and a flag-like pattern. The flag section resembles a rising wedge, which is another negative sign. XRP remains below the 50-day moving average and has formed a double-top pattern at $0.6592. As a result, it is likely that the token will experience a bearish breakout in the near future. If this occurs, the next significant level to monitor will be $0.5021, the neckline of the double-top pattern, which is 8.50% lower than the current level.
In response to the ongoing legal battle with the SEC, Ripple has filed a cross-appeal, marking its determination to fight back against the regulatory authority’s allegations.
