XRP traders are buying up the token amid speculation that Ripple and the SEC might soon settle their legal dispute.
The price of Ripple’s native digital token XRP has risen sharply this month, with traders buying up bullish bets. This renewed investor optimism comes from the anticipated resolution between Ripple and the Securities and Exchange Commission (SEC). The real-time gross settlement system and remittance network has been entrenched in a legal showdown with the regulator since 2020. According to the SEC, Ripple and its top executives had sold unregistered securities since 2013 by issuing $1.3 billion worth of XRP tokens.
Traders Bank on Continued XRP Upward Trajectory
As traders are snapping up XRP year-end bullish bets with hopes of sustained optimism, calls for a settlement with the SEC continue to propel the token. Echoing this development, Dick Lo, founder and CEO of quant-driven technology and trading firm TDX Strategies, stated:
“We have seen interest in buying XRP year-end upside call options in anticipation of a resolution in the ongoing lawsuit with the U.S. Securities and Exchange Commission.”
In addition, reports from yesterday stated that the Ripple native digital currency had broken out from a short-term pattern. Furthermore, these same reports suggested that XRP was also en route to breaking out from a long-term descending resistance line. As of press time, XRP was changing hands at $0.4277, which represents a 28% gain for the month. By comparison, leading digital currencies Bitcoin (BTC) and Ether (ETH) were trading 4.5% and 17% lower, respectively.
As the long-drawn-out legal tussle between Ripple and the SEC potentially draws to a close, many suggest that the XRP price will remain above $0.40. Both Ripple and the Commission filed motions over the weekend asking a federal judge to issue a verdict. This could be in a bid to preempt the trial from potentially heading to a jury trial.
Since reaching a low back in March 2020, XRP has followed an ascending support line. This support line also coincides with the $0.315 horizontal support area, which increases its validity. Furthermore, the token’s daily RSI has also moved above 50, a sign that the trend is bullish.
Call Option
A call is a derivative contract that gives its purchaser the valid option, but not the obligation, to buy the underlying asset at a predetermined price. However, this buyer right must occur on or before a specific expiry date. Expounding further on this, Lo stated, “Buying a call option provides exposure to the potentially explosive upside move while capping the potential loss.”
Put another way, a call buyer compensates the seller for offering protection against price rallies, in the form of options premium. Furthermore, this premium expense is the maximum money a call buyer risks losing in case of a market slide. Conversely, there is potentially unlimited maximum profit to reap from this arrangement because an asset can theoretically rally infinitely.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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