XRP plunged Tuesday heavily as traders assessed a flurry of new updates that threatened its existence as an investment-worthy asset.
Late last year, the US Securities and Exchange Commission had filed a class-action lawsuit against Ripple Labs—a San Francisco-based blockchain company—and two of its executive officers for allegedly selling $1.3 billion in unregistered securities in XRP.
In its response, Ripple opted to file a motion to dismiss the litigation. Nevertheless, the latest filings showed that the two parties would not see a pre-trial settlement, scaring traders into selling XRP tokens on Tuesday despite posting runaway upside moves in the previous session against the general market trend.
XRP fell more than 12 percent to hit an intraday low of $0.498 from its week-to-date high at $0.688. At its lowest this week, the token was changing hands for as much as $0.44.
The sell-off also coincided with MoneyGram’s decision to put its pact with Ripple Labs on hold, citing the SEC’s litigation against the company. On Monday, the money transfer company stated that it would not benefit from Ripple market development fees in the first quarter of 2021, a break from 2020’s first quarter when it secured $12.1 million in such fees.
Ripple’s partnership with MoneyGram included a pact that enforced the former to pay the latter to use XRP token for settling transactions globally since 2019. Since then, MoneyGram has banked $61.5 million in a so-called “market development fee” from the blockchain firm.
MoneyGram’s decision also poured doubts over Ripple’s partnership with other banking service clients across the globe.
XRP Technical Analysis
Technically, XRP held its upside bias above its 20-day exponential moving average, as shown in the chart above. An attempt to close below it met with an aggressive buying pressure at around $0.44. Nevertheless, the token risked falling to its 50-day moving average at $0.39 should there be another bearish attempt.
Conversely, a pullback from here would have XRP test its previous resistance at $0.63 for a breakout. Should it happen, the Ripple token expects to reclaim its session high near $0.82.