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PrimeXBT Lead Analyst Kim Chua: The Worst May Be Over for XRP, There is Room for Positive Surprise

On Monday, 1 February, the XRP community scheduled a pump in XRP price at 8.30pm EST. Since the plan was announced, the price of XRP crept higher from $0.25 to $0.755, but crashed at the time the pump was supposed to take place. Many cited downtime at crypto exchanges due to the heavy volume at the remaining exchanges supporting XRP. As everyone is aware, not many exchanges support the buying and selling of XRP anymore, especially in the USA where the SEC alleged that XRP is a security and had filed a lawsuit against them.  Hence, it is justified that remaining exchanges could not support the buying. Regardless, price plunged heavily in the hours after the failed pump, with price falling to $0.35 low in the 24 hours after. 

Naysayers laughed at XRP, saying things are over for one of the most popular cryptocurrencies amongst retail investors. However, it is really over for XRP? I doubt so. 

Before news of the pump went around, XRP was trading at around $0.25, with little trading interest. However, in the run-up to the pump, XRP price and volume exploded, with average value of around $2 billion traded at top exchanges, beating even BTC in terms of value traded. Even in the aftermath of the failed pump, the price of XRP was 10 cents higher than it was before, falling to a low of $0.35. Price subsequently recovered to around $0.43. Although the pump failed, it managed to regenerate interest in XRP and even managed to prop up the price to almost double that of before. 

If the pump was a PR event, it has been most successful, getting attention back to XRP, and may have even put in the low for the price of XRP. There is room for a positive surprise in the lawsuit to spring up. 

Lately, there has been several narratives from various influential people in the financial and regulatory circle speaking in favour of Ripple and XRP. 

In the last few days, former SEC executive Joseph Hall revealed in an interview that he thinks there’s a strong chance the SEC loses its case against Ripple. Hall finds the SEC case “pretty astonishing.” He argues that a judge reviewing the lawsuit is likely to be influenced by the fact that the case doesn’t seem to have been involving any imminent investor harm, and hence, the resultant ruling may be in Ripple’s favour. 

Meanwhile, Ripple’s Freedom of Information Act (FOIA) filing may see SEC responding on 15 February. Ripple filed to FOIA to request information from the SEC on why ETH was not deemed as a security and their answer may come next week. This answer will help Ripple a great deal in defending their lawsuit against the SEC. Ripple has already filed a rather strong defence in response to the SEC’s allegation at the end of January. 

A new Chairman at the SEC may also help Ripple and XRP with regards to the lawsuit. Jay Clayton, who initiated the lawsuit with Ripple, has already left the SEC. New Chairman, Gary Gensler, who is better acquainted with the cryptocurrency space than Clayton, may be more lenient with Ripple.

Also, since the news about the SEC lawsuit and subsequent suspension of trading in XRP by some exchanges, whoever needed or wanted to sell XRP would have already done so. This means that the selling pressure has been reduced since the news of the lawsuit broke end December 2020. The remaining holders are waiting for the outcome for the lawsuit which I personally feel may turn out positive for XRP.

With the court date set on 22 February, and a mediation session arranged on 15 February, we are drawing near to an outcome, with a lost by Ripple already priced in by many traders in the market since many have sold. However, should Ripple win the lawsuit, expect cascading buy orders to drive up the price of XRP in a short time. Institutions investors like Grayscale may start to add XRP back into their Trusts.

Should Ripple lose the lawsuit, all is not over for XRP either since many other countries do not consider XRP a security. For instance, Japan specifically put up a notice to tell investors that XRP is not considered a security in Japan. In fact, Ripple’s partner, SBI Holdings from Japan, has lots of plans to expand its uses of the XRP token. SBI Holdings has introduced a scheme where it will allow customers to lend the XRP cryptocurrency in return for interest. According to an announcement from the group’s crypto exchange, SBI VC Trade, XRP lending is available from today with a lending period from 84 days. 

Despite the lawsuit, plans to integrate XRP into the financial system is on-going as can be seen in the SBI example above. Recruitment and expansion of XRP usage in CBDCs is still on-going, as can be seen in various job postings Ripple has put up. Furthermore, Ripple’s RippleNet Cloud Service Receives SOC 2 Certification from American Institute of CPAs, which is a significant security and privacy compliance milestone. While it has no direct relationship with the XRP token, this certification is a confidence boost to Ripple and a show of Ripple’s commitment towards achieving excellence in its services. 

Hence, it appears that the lawsuit is but a small hiccup to Ripple’s adoption plans. Even if it loses, it will just not be traded in the USA, but its plans to integrate the XRP token into the financial system will not be affected. XRP will still survive without the USA. We have already witnessed its price go up 3x over one weekend when most US exchanges no longer list XRP.  

Looking at the massive upside potential in XRP price should Ripple win the lawsuit, purchasing XRP ahead of the hearing to await the court ruling seems like a justifiable bet. 

 About Kim Chua, PrimeXBT Market Analyst

Kim Chua is an institutional trading specialist with a track record of success that extends across leading banks including Deutsche Bank, China Merchants Bank, and more. Chua later launched a hedge fund that consistently achieved triple-digit returns for seven years. Chua is also an educator at heart who developed her own proprietary trading curriculum to pass her knowledge down to a new generation of analysts. Kim Chua actively follows both traditional and cryptocurrency markets closely and is eager to find future investment and trading opportunities as the two vastly different asset classes begin to converge.

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