Ripple (XRPUSD) is bumping up against ascending triangle resistance (on the daily chart) and the psychologically key 0.5 whole figure level. A break above this multiple resistance zone in the next week or so will likely be quickly followed by a test of the psychologically key 0.75 level. XRPUSD is a prime candidate in the next few months to play catch up to Bitcoin (BTCUSD) and Ethereum (ETHUSD), where a rotation will continue into other less near-term overbought, top coins that have yet to see an explosion upwards. Except for the weekly Stochastics which is now overbought, the weekly and daily RSI, Stochastics and MACD are rallying.

Ripple Fundamentals

XRPUSD bulls were encouraged this week by the announcement that MoneyGram (the world’s second largest money transfers provider) will utilize XRP through Ripple’s xRapid product. As part of the partnership, MoneyGram will receive up to USD 50M in capital from Ripple in exchange for equity. The MoneyGram announcement should help Ripple convert more of the 200 plus financial institutions supposedly testing Ripple products into using xRapid – the product that makes use of XRP – as opposed to simply using xCurrent. xCurrent installations have the option to upgrade to support use of XRP, but are seeing slow adoption due to the regulatory uncertainty over treatment of XRP. Other ongoing lids on a stronger XRP rally include Ripple holding 60 billion XRP and selling into rallies, and the threat of any legal action against Ripple for being deemed to having issued a security (i.e. XRP) without meeting appropriate regulatory requirements. Increasingly, the pressure against XRP will come from the proliferation of stable coins (including Facebook’s Libra) which have much lower volatility than XRP.

Industry Fundamentals

Facebook published its whitepaper on its Libra stablecoin project (slated to go live the first half of 2020), but was relatively short on details due not in small part to an expected robust pushback from regulators, central banks and politicians around the world.  Much of the unbanked that Facebook is hoping to go after with its low cost payments solution resides in countries where either Facebook or crypto is currently banned. Key investors like Visa, Mastercard, Paypal and Uber have injected USD 10M each to become members of the Libra Association and to manage their own node. The objective is to have 100 investors (from a variety of industries, including telecom, media and e-commerce) with 27 names already on the list. Banks have passed on the project so far.

Fidelity’s institutional crypto trading offering is currently available (or in testing) for select clients, with retail brokerage giants Etrade and TD Ameritrade also preparing to launch trading in a few top coins. Longer term industry bulls are increasingly buying on dips as the sector overall gains interest from IBM’s use of the Stellar blockchain for its payment network – the World Wire.  Banks will be able to launch stablecoins on World Wire, or to use Stellar Lumens directly as a bridge currency between different fiat currencies. Ongoing anticipation is building for the coins being developed by other leading messenger apps (i.e. Line, Kakao) and banks (i.e. JP Morgan, Mizuho, Bank of Tokyo-Mitsubishi UFJ). The launch of BAKKT has been delayed multiple times with no announced target go live date. A race continues to launch STO exchanges and consultancies ahead of increasing regulatory clarity on STOs.

The market is increasingly shrugging off the fears around Bitfinex covering up losses with funds earmarked for backing Tether (USDT), especially as it has apparently already received commitments for USD 1B in its current raise to offset funds frozen by US, Polish and Portuguese authorities. With liquidity on USDT significantly higher than newer, competing USD-backed, audited stable coins due not in small part to USDT enjoying first mover advantage and the network effects from having the longest established history, the market appears to be largely sticking with using USDT which is listed on more crypto exchanges and offers superior liquidity. 

Check out more about today’s fundamental analysis recap on the crypto industry, as well as technical and fundamental analysis on Ethereum and Bitcoin here

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Darren Chu, CFA
Darren Chu, CFA, is the Founder of Tradable Patterns. As seen on Bloomberg, Refinitiv (Thomson Reuters), Factset, Interactive Brokers, Inside Futures, Amazon, Liquid (Quoine), EXMO and Zerohedge. Tradable Patterns was launched to demonstrate that the patterns recurring in liquid futures, spot FX and cryptocurrency markets can be analyzed to enhance trading performance. Tradable Patterns’ daily newsletter provides technical analysis on a subset of three CME/ICE futures (commodities, equity indices) and spot FX markets, which it considers worth monitoring for the day/week for trend reversal or continuation. Crypto Weekly Outlook offers technical analysis on Bitcoin (BTCUSD), Ethereum (ETHUSD) and Ripple (XRPUSD or XRPJPY) and attempts to provide clues as to what might happen in the coming week. For less experienced traders, tutorials and workshops are offered online and throughout Southeast Asia. Tradable Patterns content does not constitute an advisory and does not make recommendations, but can supplement your own analysis. Please do your own due diligence ahead of any trades.