Why Ripple's (XRP) 40% Plunge is Great News for Investors
SEC Brings Suit Against Ripple
UPDATE 12/30/2020 3:43PM: After really diving into the nature of the lawsuit against XRP and the precedents that establish the SEC's authority to do so, my views on the amount of risk XRP poses has changed. I have followed this up with a post that covers my change in thinking, which you can read here.
----Original Article----
[Jacksonville, FL - 12/25/2020 11:00 AM; Update 8:34 PM 12/25/2020] As everyone on this platform and in the crypto universe is aware -- The SEC filed charges and a lawsuit against Ripple which caused the XRP token to plunge massively, losing close to 40% of it's per-token value at the worst part of it. You can read more about the lawsuit here, but I'm going to give you a quick breakdown so that you can easily take in and digest the news.
On December 21, 2020, Ripple was enjoying a price of $0.51 per XRP, which, while still high, was a decrease from it's almost $1.00 price during the days prior to 12/21, likely fueled by the astronomical ATH rise of Bitcoin. This same day, the SEC announced that that would be pursing action against Ripple and two of its executive for selling of an unregistered security.
The interesting thing here is that the federal government is now on record recognizing a cryptocurrency as a security, which gives is a legal status and makes it subject to the same regulation as other securities, such as stocks and bonds. One of Ripple's executives has pushed back on this classification and the SEC in general by clarifying that XRP offers much more than most securities and that it is a fully functional currency akin to Ethereum and BTC. The executive then went on to accuse the SEC of taking an unfair stance on Ripple as opposed to BTC and ETH, which prompted a response from Ethereum creator Vitalik Buterin, as follows:
Vitalik Buterin, founder of Ethereum: "They’re claiming that their shitcoin should not be called a security for *public policy reasons*, namely because Bitcoin and Ethereum are ‘Chinese-controlled."
Because this is all rather technical, most people did not actually sell off their XRP because of the SEC lawsuit, but rather to how others with technical knowledge of the SEC charges responded. This sell-off caused XRP to drop from 0.51 to 0.31 in a single day.
So, why is this a good thing, you may be asking yourself?
Well, there are many people out there who have not given XRP a second look. I was one of them. I did not see much of a future in profitability with XRP, even though I knew that it was a solid project that will not be going anywhere anytime soon. I thought XRP better for products that aimed to eliminate high fees associated with transaction settlements, but not as an investment. This has completely changed that for me, and I invested a little over $250.00 into XRP at $0.31. In the few days since, it's already risen back to $0.38, which is about a 26% gain from the price I bought at. Merry Christmas indeed! Any while it's not much, it shows me that there is a potential here to make large, quick gains in the next several months.
If one were to have put $10000 into XRP on 12/21, they would have $12500 right now. That's a $2500 Christmas gift from Ripple!
So, taking this into account -- the reason that the 40% plunge was a great thing is because it allows people who have previously not taken a second look at XRP to get in at a discounted buy price that is almost certain to make a substantial return on the initial investment.
Previously, I advocated for investing stimulus money into BTC if you have the ability to save a bit of the payment back because of similar gains this year. I wrote the initial article after BTC sharply fell to under $4000 in the early days of the OPEC crash and COVID19 pandemic and then quickly regained to $7500. Bitcoin is now at around $24000, but there is still plenty of room to go in terms of valuation. However, I am starting to re-think my goal here and will instead will be running a 6-month study in which I will invest around $1000 into various crypto through the Coinseed De-Fi service and will publish results throughout the 6-month period.
I hope that you all will join me on this journey!
Oh yeah....and Merry Christmas to all!
References
3. https://www.sec.gov/news/press-release/2020-338
