XRP: Ripple is not out of the woods yet, despite positive SEC news
Ripple (CCC:XRP-USD) hit a high of $ 1.96 on April 14, reaching its highest level in more than three years, after Ripple executives filed motions to dismiss the lawsuit from the states Securities and Exchange Commission (SEC) -United against them and society.
In December, the regulator accused Ripple of leading a $ 1.3 billion unregistered securities offering in 2013. Naturally, once the news broke, XRP cratered. It is an industry that is extremely sensitive to current events. Therefore, any good or bad news will have a huge impact on the price.
However, things are improving on this front. Last week, the court dismissed the SEC’s request for eight years of financial data on CEO Brad Garlinghouse and Chairman Chris Larsen.
A court document from Judge Sarah Netburn of the U.S. District Court for the Southern District of New York shows the court also dismissed other subpoenas seeking the executives’ financial records.
The new turn in the SEC vs. Ripple case makes XRP holders bullish once again. A positive resolution of the matter will cause the coin to skyrocket.
However, there are some risks that you should be aware of before investing in XRP-USD. For example, the opening of the Ripple network allows vulnerabilities. This will irritate the regulatory bodies and could lead to more legal pressure in the future.
Additionally, Ripple chairman Chris Larsen owns around a third of all XRP, and CEO Brad Garlinghouse also owns a significant amount of the coin. It’s too much concentration. And increases the likelihood that the price is over-inflated.
As we will see later in the article, Ripple faces stiff competition in its industry.
SEC Lawsuit Is The Main Catalyst For XRP In The Short Term
Things are looking up for Ripple in its SEC case. When most other cryptos were soaring, the lawsuit led to XRP’s price crashing to new lows.
Since that time, the price has rallied, helped by the fact that the SEC’s case appears to be weak, leading to an upward trajectory for XRP.
In March, Judge Sarah Netburn said the Ripple coin had a use, dealing a blow to the SEC’s legal argument.
However, a positive result is not set in stone. In the short term, XRP will continue to live and die by this court ruling, however. You have to stay informed if you are invested in altcoin.
Not all Hunky Dory
As I write this, XRP is sitting well. The SEC proceedings are building a positive momentum, and the “XRP army” demands that exchanges put the token back on sale.
One thing is certain. XRP is not Dogecoin (CCC:DOGE-USD), which started off as a joke but exploded earlier this month.
For several emerging economies, XRP is exactly the kind of lifeline they need. It speeds up cross-border transactions, enabling faster processing times and easier flow of capital. All of this is of particular interest to emerging economies lacking a solid financial infrastructure.
In addition, Ripple has excellent institutional support. German bank Fidor, First Abu Dhabi Bank PJSC, American Express (NYSE:AXP), Banco Santander Brasil SA (NYSE:BSBR) and MoneyGram (NASDAQ:MGI) have all embraced digital currency. In addition, Ripple is always on the lookout for new partners and has a great organization that supports its efforts.
But is it risk-free? Not at all.
First, XRP coins are pre-mined and already in circulation. Meanwhile, Bitcoin (CCC:BTC-USD) has a fixed cap of $ 21 million, which means it will become more valuable over time, leading to sharp price increases that serve as rich dividends for investors smart enough to jump into the action quickly.
Ripple also has a very nimble competitor in the form of SWIFT, the world’s largest international payments network, as well as strong support from the banking industry.
Investors should be aware that Ripple is not decentralized like other cryptocurrencies, as it was designed specifically for the banking and financial industry. Hence, it competes in a very fierce business segment.
Things look upbeat at the moment
XRP bulls are back in force. The number of large holders, those holding 100,000 to one million coins, increased by 150 this month.
In the long run, however, there are challenges. Ripple is looking to take on the “big cheese” of the financial services industry.
So far, it has managed to gain the trust of more than 60 major financial institutions around the world. However, he will have to work aggressively to maintain his position and develop.
All things considered, I would buy XRP for now. The stars are aligned for positive short term price dynamics. Whether XRP is a long-term bet remains to be seen, but the same can be said for the wider crypto industry.
Therefore, it is not enough to deter investors who are looking to make money by trading this digital asset.
At the date of publication, Faizan Farooque did not hold (neither directly nor indirectly) any position in the securities mentioned in this article.
Faizan Farooque is a contributing author for InvestorPlace.com and many other financial sites. Faizan has several years of stock market analysis experience and was a former data reporter at S&P Global Market Intelligence. His passion is helping the average investor make more informed decisions about their portfolio. Faizan does not directly own the securities mentioned above.