Ripple, the cryptocurrency that will potentially back bank transactions in Japan and elsewhere, became a darling of the cryptocurrency world in late 2017 and early 2018. The price more than quadrupled from the lows of crypto-crash of December 22nd, when XRP/USD traded around $0.82 to the peak of $3.24.
And this isn’t just an emerging digital coin like Vibe. Ripple was already one of the top cryptos and dethroned Ethereum to reach second place. At some point, the market cap reached 60% of bitcoin’s and there was some talk it could become No. 1.
But things went downhill from there. XRP/dollar is only around $1.80 after hitting support at $1.61. The market cap is hovering around $70 billion, at a distant third after Ethereum which is worth around $130.
So why is Ripple lower? Here are four reasons:
- Coinbase denial: One of the drivers of Ripple to the upside was a rumor that the world’s largest cryptocurrency exchange, Coinbase, will it include. A clear denial triggered the initial turnaround.
- Regulatory efforts against cryptocurrencies: Chinese authorities are trying to halt the mining of cryptocurrencies. The focus is on bitcoin, but there is a “ripple effect” as well. Efforts to get the cryptocraze under control are also underway in South Korea, where ripple is heavily traded.
- Lawsuits: Back in 2016, then Ripple CEO Chris Larsen signed a deal with R3, a bank consortium allowing the latter party to buy 5 billion XRP for less than a penny. R3 is suing Ripple and Ripple is countersuing. The legal battle has heated with the value of the coin, and now, this legal battle is also hurting the price. Such stories are negative for the value of XRP.
- Profit taking: Investors in Ripple, those that bought it when it was worth one penny or one dollar, had already made a huge profit and some saw the decline and decided to get out, cashing the profits. This cascading effect also hurt Ripple.
Will Ripple continue falling?
A lot depends on real-world use of the crypto coin. If indeed, the 4-second transaction times will lead to adoption by many banks, XRP could stabilize and this 50% could be just another necessary correction.
However, if we get further selling pressure, regulatory pressure and bad news from unknown sources, this may not be the end.
XRP/USD levels to watch
In any case, the swing low of $1.61 has proven to be a strong level of support, and it is now a double bottom. $1.50 is a round number and also held the price back on the way up. A previous high from before the pre-Christmas crash is $1.25.
Below that point, we can point out to $1.10, parity with the US dollar and that aforementioned $0.82 level.
Looking up, XRP/USD may find resistance at $2, another round level, before the next stepping stones of $2.10 (strong), $2.20 and $2.30 (both weak).
Further above, $2.50 remains important not only because it is a round number, but also as it serves as a support line when Ripple traded at much higher ground. The $3 level is also worth watching before the all-time high of $3.32.Get the 5 most predictable currency pairs