Ripple’s XRP dropped 3% on Tuesday, continuing its recent downtrend despite the Securities and Exchange Commission (SEC) acknowledging the Bitwise XRP Exchange-Traded Fund (ETF) application. According to Unchained Crypto, the ETF may face underperformance due to some key fundamental challenges surrounding XRP.
The SEC’s filing on Tuesday confirmed that it had acknowledged Bitwise’s XRP ETF application, which was submitted to the Cboe BZX Exchange. The filing opens a 240-day period during which the SEC will decide whether to approve the ETF. The agency had previously acknowledged similar XRP ETF applications from Grayscale and 21Shares, with WisdomTree and Canary Capital’s applications still pending.
However, Unchained Crypto noted that institutional investors are still grappling with Bitcoin and Ethereum ETFs, which could make altcoin ETFs, including XRP, underperform. Additionally, the XRP Ledger’s 2024 projected revenue of $1.15 million is significantly lower compared to Ethereum’s revenue of over $1 billion. The report also highlighted Ripple Treasury’s massive XRP holdings—4.485 billion XRP and 38.9 billion XRP in escrow—which could lead to significant selling pressure.
Despite these concerns, Bloomberg analysts James Seyfarrt and Eric Balchunas have predicted that XRP ETFs have a 65% chance of SEC approval, partly due to the ongoing legal battle between the SEC and Ripple.
Technical Analysis: XRP Faces Breakdown Risks
XRP has seen $10.91 million in futures liquidations in the past 24 hours, with most of the liquidations being long positions. XRP has also fallen nearly 10% in the past three days, after being rejected near the upper boundary of a symmetrical triangle pattern. This move saw the token drop below key moving averages, including the 50-day Simple Moving Average (SMA) and 14-day Exponential Moving Average (EMA).
The lower boundary of the symmetrical triangle pattern could act as support, offering potential for a bounce and a move toward the $2.72 resistance level. However, if this support fails, XRP may break down further toward the $1.96 level. The Relative Strength Index (RSI) and Stochastic Oscillator are signaling increased bearish momentum, adding to the downside pressure on XRP.
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