Ripple Price Takes Sudden Hit As FCA Bans Retail Trading of Crypto Assets
Ripple price has pulled back from its intraday high as traders struggle to digest the latest ruling from the regulator of the UK financial markets, the Financial Conduct Authority. The FCA has released new rules on crypto-asset trading which now prohibit the sale of Ripple, Bitcoin, Ethereum and other crypto derivatives to retail customers. Also covered by the ban are exchange-traded notes (ETNs).
Explaining the rationale for its action, the FCA statement to this effect which is posted on its website, says that crypto derivatives are “ïll-suited for retail consumers due to the harm they pose”. The statement further went on to say that “these products cannot be reliably valued”, and mentioned a host of risks associated with crypto trading. Risks mentioned by the FCA include extreme volatility, cyber theft, poor understanding of crypto assets and a lack of legitimate investment need in these products as additional reasons for the ban. The ban is to take effect on 6 January 2021, well after the complete exit of the UK from the EU must have taken place.
At this moment, it is uncertain how UK-based crypto exchanges will react to the announcement. Ripple price had touched intraday highs at 0.25924, but has pulled back heavily and is now trading close to Tuesday’s market open price of 0.25032.
Technical Outlook for Ripple Price
This announcement could trigger a run on several UK exchanges as panicked investors start to sell off their crypto holdings. If Ripple price declines as a result, we could see XRPUSD push down towards the 0.24722 support. A further decline would depend on price breaking down this support line. If this is successful, then Ripple price could extend downwards to 0.22329, with 0.23137 posing as a pitstop to this move. A price drop to 0.21288 cannot be ruled out if any selling gets more aggressive.
On the flip side, a bounce off 0.24722 could allow Ripple price to recover, with 0.26059 being the initial upside target. The resistance target at 0.28285 is now starting to look elusive, unless buyers of XRPUSD decide to shake off the news and continue with business as usual.