XRP Price Movement: Is a Withdrawal of the SEC Appeal on the Horizon?

XRP saw a 0.89% increase, following a notable 3.11% gain on Friday, closing at $2.4196. This performance outpaced the broader market, which grew by 0.51%, with the total market cap reaching $3.11 trillion.

SEC Under Scrutiny: Investigation into Conflicts of Interest

The SEC and the Office of Inspector General (OIG) have been under mounting pressure this week to release findings from an ongoing investigation into potential conflicts of interest involving SEC officials and the crypto industry.

US whistleblower group Empower Oversight filed a lawsuit against the SEC, demanding the release of the OIG’s investigation findings. This investigation stems from a 2022 referral made by Empower Oversight regarding potential conflicts of interest within the SEC related to crypto regulations.

The focus of the inquiry is former SEC Director of the Division of Corporation Finance, William Hinman. Back in 2018, Hinman publicly declared that Bitcoin (BTC) and Ethereum (ETH) were not considered securities. However, he had ongoing connections with his previous employer, Simpson Thacher, a law firm involved with Enterprise Ethereum at the time.

Empower Oversight had previously sued the SEC in 2021, alleging that Hinman had received substantial financial compensation from his former law firm while simultaneously influencing the SEC’s approach to cryptocurrency regulations.

Hinman’s Role in the Ripple Legal Battle

Hinman found himself at the center of discussions on February 8, following his participation in a panel on regulatory developments under the Trump administration. Amicus Curiae attorney John E. Deaton shared a clip from the event, where Hinman made remarks on regulatory caution, referencing the challenges faced by the SEC.

Deaton criticized Hinman’s involvement with Ethereum, highlighting that various divisions within the SEC were privy to drafts of his 2018 speech—except for the Ethics Division. Deaton further pointed out that Hinman was repeatedly warned that his continued meetings with Simpson Thacher colleagues could violate conflict-of-interest rules.

In the Ripple case, the SEC has fought to withhold documents related to Hinman’s 2018 speech, arguing they are protected under attorney-client privilege. Despite numerous attempts, the SEC failed to shield these documents, which revealed that Hinman’s ties to Simpson Thacher persisted even after receiving ethical warnings.

Speculation Grows over Potential SEC Appeal Withdrawal

As pressure mounts, there’s growing speculation that the SEC could choose to withdraw its appeal in the Ripple case. The SEC’s appeal, filed on January 15, follows a July 2023 ruling by Judge Torres, which determined that Programmatic Sales of XRP do not meet the third prong of the Howey Test, a key legal standard for classifying an asset as a security.

XRP Price Outlook: Can It Break New Highs?

XRP’s future performance is closely tied to the SEC’s decision regarding its ongoing appeal in the Ripple case. If the SEC withdraws the appeal, XRP could potentially break its all-time high of $3.5505 and target the $4 mark. Such a move could also pave the way for the SEC to approve XRP-based spot ETF applications, potentially driving institutional interest. On the other hand, if the SEC proceeds with the appeal, XRP could face downward pressure and fall towards $1.50.

Price Action and Technical Indicators

Despite the recent gains, XRP remains below its 50-day Exponential Moving Average (EMA), but it continues to hold above its 200-day EMA. This technical pattern suggests a bearish short-term outlook, while longer-term trends remain positive.

If XRP manages to break past the $2.50 level, the 50-day EMA could become a key resistance point. A sustained move above the 50-day EMA could open the door for a rally towards $3. Alternatively, if the price falls below $2.30, the next support level to watch is $1.9299. A drop below this level could signal further declines, potentially revisiting the February 3 low of $1.7024.

With the 14-day Relative Strength Index (RSI) at 38.12, XRP is not yet in oversold territory but could approach that level if prices drop further.

Market Sentiment and Regulatory Risks

XRP’s price movement will remain sensitive to regulatory developments, particularly the SEC’s appeal decisions. Broader market conditions, such as shifts in US foreign policy and macroeconomic trends, could also affect investor sentiment and, consequently, XRP’s price action.

While initial optimism regarding Trump’s re-election led to a positive sentiment boost, his later tariff policies introduced some pressure on XRP prices. From a high of $3.1341, XRP saw a dip to $1.7938 on February 3 due to tariff concerns, but it has since rebounded slightly. Economists predict that higher import prices and inflationary pressures from tariffs could delay expected Federal Reserve rate cuts, potentially impacting XRP’s price in the short term.

For deeper insights into the ongoing legal developments and their implications for XRP’s price, stay updated with our latest analysis.