28 December 2020
The XRP price target is showing weakness against charges filed by the SEC regarding how XRP is classified and the legality of its sales since 2013.
According to Coinmarketcap, the coin is down by 15% in the past 24 hours. At the time of writing this article, the coin currently trades for $0.3. It went from the third-largest cryptocurrency by market capitalization to fourth, trading below Tether’s USDT.
Aside from UMA, XRP is the worst performing crypto asset in the top 100 market capitalization. Some analysts even believe that XRP could further drop. The volatility of the price of XRP has rivaled the most capricious of cryptos. Since XRP’s all-time high of 3.84 back in January of 2018, the coin has spent much of the past two years plummeting.
Although XRP has seen its biggest rally in a long while, those gains have been erased by SEC’s lawsuit. The SEC argues that XRP has always been security and should have been registered with the commission. SEC claims that the defendants (Ripple CEO Brad Garlinghouse and executive chairman Chris Larsen) generated more than $1.3 billion from XRP coin sales.
Recently, Ripple was valued at $10 billion following a $200 million funding round. Although Ripple and XRP are technically separate, Ripple maintains a significant amount of the token’s market capitalization. There was a time the XRP token was referred to as “ripple” and even shared the Ripple Company logo.
The latest charges filed by the SEC draw the question, “Is XRP a security?” The Company has always maintained that XRP is not a security. Instead, Ripple has positioned XRP as a tool for financial institutions to improve upon cross-border transactions.
The primary purpose of the Securities and Exchange Commission is to protect investors by ensuring that there is necessary registration for securities and bonds while ensuring the US companies are delivering necessary transparency into the financials of companies and its executives.
As such, this is where Ripple has come under heavy scrutiny. The SEC is alleging that Ripple has violated Sections 5(a) and 5(c) of the Securities Act of 1933 through the illegal and unregistered sales of XRP. The filing states that Ripple’s current CEO, Brad Garlinghouse, and former CEO, Christian Larsen, have “orchestrated these unlawful sales and personally profited $600 million from their unregistered sales of XRP.”
In a blog post by Ripple CEO Brad Garlinghouse, he claimed that the SEC’s lawsuit was wrong on the facts and law. He said that the Company is confident that they would “ultimately prevail before a neutral fact-finder.” The most intriguing aspect is Garlinghouse saying he was offered an option of settling with the SEC. His decision not to drop but instead “fight” may likely show his confidence that XRP is not a security.
Is XRP a Security?
XRP has extended the sell-off as different cryptocurrency exchanges started to delist the coin following the SEC lawsuit. If the SEC wins the legal battle, XRP will be officially considered “a security.” The implication is that all the trading platforms supporting the coin will have to be registered as security exchanges.
Many analysts think XRP could drop further even after experiencing a 30% crash on the recent SEC lawsuit. The CEO of Messari, Ryan Selkis, recently published a thread outlining critical points mentioned in the SEC securities. Messari believes these points will mark the end of XRP’s uptrend. He explained that while Ripple has ambitious goals, none of those goals have been realized.
Since its peak on November 24, the network growth of XRP has significantly declined. In another development, the number of whales holding at least 10,000,000 XRP has increased. The indication is that large investors are deeply interested in XRP. If the sell signals are invalidated, we could see the XRP price quickly jump to an uptrend.
Is there Going to be a Big Ripple Pullback?
The SEC lawsuit will be a “make or break” test for XRP and Ripple. If the SEC wins the legal battle, it is arguably all over for XRP in the market. If Ripple comes out on top in this legal tussle, the price of XRP will most likely skyrocket. There is a significant loss of trader confidence in the XRP coin’s viability with the current situation. Therefore, there will probably be witnessing more market pullback towards Ripple and XRP coins.
This could be an excellent opportunity for traders and investors to buy the XRP token. However, it would be best if you had tremendous confidence in Ripple Company’s leadership to overcome the current storm. This is likely going to be a 50/50 chance at best; therefore, you must tread carefully.
This period has been a tough one for XRP coin holders and the Ripple team in general. The market pullback is expected, but the long-term impact on XRP is yet to be fully understood. Everything now depends on Ripple Company’s leadership to win this fight and deliver for people who trusted them.