The Ripple price has struggled in the past few days even as the rest of the cryptocurrency industry has bounced back. XRP is trading at $0.9885, which is 52% above its lowest level last week and 50% below its year-to-date high of $1.9615. The token is still down by more than 16% in the past seven days while other top currencies like Bitcoin and Ethereum have recovered by 4% and 2%, respectively.
The cryptocurrencies sell-off
The price of most cryptocurrencies tumbled last week as most speculators sold their holdings. The drop was caused by three primary reasons.
First, there was concern about high interest rates in the United States. This is after data showed that the headline consumer price index and producer price index rose by 4.2% and 6.2% in April, respectively. This was substantially higher than the Fed’s target of 2.0%.
Therefore, with inflation rising and the labor market tightening, investors were concerned that the Fed would hint to possible tightening. You can read my in-depth look into the relationship between interest rates and Bitcoin prices here.
Second, the Ripple price declined because of the rising fear of regulation. This is after Chinese regulators warned financial companies about accepting and dealing with cryptocurrencies. This was a notable thing since China is the second-biggest economy in the world and is a leading player in the crypto sector. There is also increasing fear that the US will also crackdown on the sector after the recent Colonial Pipeline hack.
Finally, cryptocurrencies dropped because of increased selling by speculators who rushed for the exit. This is known as a panic sell-off.
Ripple price has struggled
While most cryptocurrencies have staged a strong comeback, Ripple has continued to struggle. This is partly because of the ongoing case in a US court. As you recall, the SEC filed a lawsuit against Ripple Labs and two of its executives in December.
The agency accused them of raising more than $1 billion illegally. In other words, the SEC terms XRP security. Ripple Labs, on the other hand, terms XRP a commodity that is similar to BTC and ETH. Therefore, the cloud about this case is still hanging around. There are also concerns about Ripple’s decentralization considering that Ripple Labs has the mandate of controlling the supply and demand of the token.
XRP price analysis
The daily chart shows that the Ripple price has been attempting to recover after it fell to a multi-week low of $0.6495 last week. The currency managed to move above the important resistance at $0.9178. However, a closer look shows that Ripple is still below the 50-day and 25-day exponential moving average.
Indeed, the two averages are attempting to make a bearish crossover pattern. Therefore, while the currency may keep rising, the risks for going long are more than those of staying in the sidelines.