Ripple Could Push Higher if the SEC Suit Against Ripple Labs Ends

Mark Hake

Ripple could rise significantly once its legal problems are resolved

Ripple (XRP) has been drifting down over the last month. After peaking on Nov. 10 at $1.33 per token, it has been on a steady slide ever since then. As of Dec. 12, XRP-USD stood at 84.55 cents. That represents a drop of over 36% in one month. And while Ripple is currently being dragged along by prevailing crypto trends, its legal battle with the Securities and Exchange Commission (SEC) could be a game-changer for the crypto world.

Currently, XRP-USD is well below its peak of $1.839 on April 13, according to Coinmarketcap.com. Nevertheless, so far this year, it is still up 256% year-to-date from 23.744 cents at the end of December.

Ripple is now the 8th largest cryptocurrency in the world. It has a market cap of almost $40 billion ($39.9 billion, as of Dec. 12). It’s just below USD Coin (USDC), a stablecoin with a market value of $41 billion, and Cardano (ADA), at $44.9 billion.

Ripple Is Influenced By Big Moves by Bitcoin and Ethereum

As one of the top 10 cryptos Ripple is also highly influenced by the big movers and shakers in the crypto world. I am referring, of course, to Bitcoin (BTC) and Ethereum (ETH).

For example, Bitcoin was up 6.5% to $49,604 from a recent trough of $46,581 per BTC token as of Dec. 4. This was after it peaked at $68,365 on Nov. 10. That’s also the same date that Ripple peaked, as I mentioned above.

Similarly, XRP-USD was from a trough of 72.63 cents on Dec. 3 to 84.55 cents on Dec. 12, a gain of 16.4% since it bottomed out.

In addition, Ethereum was over $4,000 per ETH token again on Dec. 12, after having bottomed out at $3,849 on Dec. 3, according to Coinmarketcap. But, again, this is after it dropped from a peak, also on Nov. 10, of $4,844.

This all held true on Dec. 12. But, by early Dec. 13, the trends had shifted yet again as the crypto market was hit with another wave of volatility. Ethereum and Bitcoin had tanked in price by over 5%. Unsurprisingly, Ripple was dragged along and dipped along with them by over 3%.

So, you can see very clearly that Ripple is following the paths that Bitcoin and Ethereum carve, albeit on a more pronounced basis. What that means is that it tends to have more volatility and variance, but its direction still seems to be set by Bitcoin and Ethereum.

Ripple Lab’s Legal Battle

Ripple’s parent organization, Ripple Labs, the promoting company for XRP-USD, is in the middle of a major battle with the SEC. The case is about whether the sale of XRP-USD tokens was a sale of unregistered securities, as the SEC claims. I discussed this case in my previous article on Ripple and why some think that the company will win.

Back in November, Ripple had even gone as far as outlining their own vision for the future of cryptocurrency regulatory framework in the U.S.

Recently, the CEO of Ripple Labs, Brad Garlinghouse told CNBC that he thinks that the case is nearing an end. According to Coin Telegraph online magazine, Garlinghouse told CNBC that despite the slow-moving judicial process, the case seems to have made progress. He said he believes that the case will be over in 2022.

More importantly, he said that the judge in the case realizes that the issues deal more than just with Ripple Labs. He said that he liked the questions from the judge in the case.

What This Case Could Mean For Investors

Even more interesting in this case is the fact that Ripple is looking to do an initial public offering (IPO) after the case is resolved. This will be very important for one big reason.

Almost all of the new issues these days of cryptocurrencies have been in foreign markets, not the U.S. Other than the recent crypto loans done by chains that operate on Polkadot (DOT), almost all of the initial coin offerings (ICOs) have been by non-U.S. corporations or else by non-profit corporations. These securities then begin trading on non-U.S exchanges and eventually show up in the U.S.

That is why it is so difficult to buy only a handful of the many thousands of cryptocurrencies. There are only about 200 or so cryptos that trade in dollars on Coinbase Global (COIN) and Crypto.com.

If the lawsuit ends, particularly if it ends in Ripple Lab’s favor, the rules on listing currencies and ICOs and other major issues for U.S. investors could be much clearer. It would also allow more cryptos to be listed in the U.S. and for companies that sponsor them to do IPOs and ICOs.

As a result, expect to see XRP crypto rise significantly once the lawsuit is either settled or reaches a conclusion with a judgment. One of these possibilities will likely happen sometime in the first half of 2022.

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This is not financial advice and you should not rely on my analysis to buy or sell any stock, security, or crypto, as I am not undertaking to induce you to buy or sell securities.

I am relying on the “publisher’s exclusion” in the Investment Advisers Act of 1940 to provide this information without any personalized or individualized investment advice.

This represents my analysis of XRP crypto (XRP) and it is not meant to provide you with specific advice in your own situation. I do not own XRP crypto or related securities or options but I may buy them in the near future. Your own situation could be different and this is not a recommendation to purchase the crypto.

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Mark Hake is a financial analyst, investor, and Chartered Financial Analyst (CFA). He writes about US and foreign stocks as well as cryptos, hedge funds, and private equity. He previously ran his own hedge fund, investment research firm, and acted as CFO for a fintech startup. He focuses on finding value, arbitrage, and hidden asset opportunities.

Phoenix, AZ
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