Key Takeaways:
- Ripple scored a major win against the SEC, but in a different lawsuit.
- The judge ruled secondary market sales as not being under SEC's dominion.
- XRP price formed a bull flag with a 984% price target.
NEW DELHI (CoinChapter.com) — Ripple has scored a legal victory that might be crucial for the entire crypto sector, albeit not in the Ripple SEC case. The ruling came in an appeal hearing in the LBRY vs. SEC case on Jan 30.
During the hearing, the US Securities and Exchange Commission (SEC) admitted, on record, that the sale of LBC tokens in the secondary markets does not constitute a security. Attorney John Deaton, also representing 75,000 XRP holders in the SEC vs. Ripple case, was part of LBRY’s defense.
In detail, the court awarded the SEC a summary judgment in its favor on Nov 7, 2022. The judgment categorized LBC token sales during a six-year period as an investment contract. However, the ruling did not consider the specifics of the transactions.
What Happened During The LBRY Hearing?
The SEC aimed to advance its tactic of regulation by enforcement and increase its hold over the secondary market and bring it under its jurisdiction.
As a result, the regulatory watchdog sought an affirmation from the New Hampshire district court judge on a broad and vague injunction against LBC token sales.
However, Deaton, representing tech journalist Naomi Brockwell as an amicus curiae, asked the court for clarity on LBC’s secondary market transactions. Deaton argued the Nov 2022 injunction was vague and lacked clarity.
Deaton cited a paper by attorney Lewis Cohen in support of his arguments. Cohen had examined all security lawsuits since the W.J. Howey Co case. The paper concluded that no court acknowledged that the underlying asset was security during Cohen’s examination.
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The court categorized the sale of LBRY’s LBC token to an investment club that held it in a cold wallet as a direct sale. However, the judge continued that his order was invalid if the buyer sold the LBC to someone on the secondary wallet.
Amicus, I’m going to make it clear that my order does not apply to secondary market sales.
The Judge told John Deaton.
How The Judgment Will Impact The Ripple SEC Case
The Judge made it clear that he would state clearly in his judgment that it did not apply to the secondary market. Furthermore, the SEC had to agree in the court that it did not consider secondary sales as securities, marking a big win for the crypto community and Ripple.
For the XRP lawsuit, the ruling could pave the way for an XRP SEC settlement. The recent ruling would likely work in favor of the XRP court case, as it would essentially make the Ripple token a non-security as well.
In addition, Deaton noted that the ruling is important since it brings some clarity to the status of crypto assets in the SEC’s eyes. The attorney added that the ruling would be irrelevant if Congress approves some regulations regarding crypto.
However, until that time, the recent judgment would likely serve as a reference for future and ongoing litigations, such as the XRP vs SEC legal battle.
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Speculations of the SEC likely going for a settlement have been doing the rounds on crypto Twitter since Nov 2022. As such, the LBRY ruling might put pressure on the regulatory watchdog to agree to a settlement instead of waiting on a verdict.
XRP supporters on Twitter celebrated the verdict, stating that it marks an important chapter in the XRP SEC lawsuit.
XRP Forms Bullish Technical Pattern
Meanwhile, XRP price formed a bullish technical pattern called the Bull Flag. Assets with strong uptrends usually form the pattern. Bull flags consist of a flag pole, resulting from a near-vertical rise in the crypto token’s prices.
A period of consolidation succeeding the steep uptrend forms the flag of the pattern. Despite the strong vertical rally, the asset price does not drop as bulls maintain the buying pressure. As a result, the breakout from the flag pattern often results in a powerful uptrend.
Traders calculate the price target of the breakout by adding the length of the flag pole to the breakout price level. Per the rules of technical analysis, XRP price might rise to $4.36, a jump of nearly 984% from current levels.
If the Ripple SEC case ends in favor of XRP, the resulting FOMO might help the token breakout and confirm the pattern. However, XRP might reach the price target in the fourth quarter of 2023, given that market conditions remain unchanged.
Meanwhile, Momentum Turns Bearish For The Ripple Token
Zooming on the XRP/USD chart shows that the Ripple token has been crabbing after exhausting its bull run around Jan 23. A mix of red and green candles on the daily charts suggests market participants remain divided over XRP price action.
However, it seems the Ripple token reacted to news of the LBC judgment. On Jan 31, XRP price jumped over 4% to form a daily high near $0.404. The token’s 200-day EMA (green wave) resistance rebuffed XRP’s price rally in Jan, forcing the token to consolidate above its 100-day EMA (blue wave) support.
News of the LBRY hearing might attract buyers to the market. As a result, XRP price could attempt to break above the resistance near $0.411. Moreover, breaking and consolidating above the immediate resistance might provide XRP the momentum needed to target resistance near $0.433 before retreating.
On the other hand, the momentum oscillator MACD continued to be bearish for the Ripple token. Negative bars on the MACD histogram are expanding, indicating the MACD line (difference between 12-day and 26-day EMA) is moving away from the MACD signal line (9-day EMA of MACD).
The MACD lines formed a bearish crossover on Jan 30, an indicator traders consider a sell signal. Should the selloff continue, XRP price might drop to the 20-day EMA (red wave) support near $0.395.
Breaching the immediate support level could push the Ripple token to move below the 100-day EMA support and fall to test support near $0.38 before recovering.
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