The crypto space, and Ripple (XRP) investors, in particular, are gearing up for a potentially big event this week. By Wednesday (January 15), the SEC is expected to submit its appeal-related opening brief in its ongoing case against Ripple.
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In October last year, the SEC filed its Notice of Appeal, challenging the court’s decision on the Programmatic Sales of XRP. That decision concluded that programmatic sales of XRP did not meet the third prong of the Howey Test. This major ruling allowed crypto exchanges to relist XRP, thereby boosting adoption and enabling Ripple to expand its operations in the US.
Despite the deadline, it’s not clear whether the SEC will proceed with filing its opening brief. Under normal circumstances, the SEC would likely move forward with the appeal as planned. However, Trump’s recent election win and the anticipated overhaul of the SEC have altered the picture. With SEC Chair Gary Gensler set to step down on January 20, markets expect Trump’s nominee, Paul Atkins, to shift the agency’s stance on crypto enforcement. This could include withdrawing the appeal in the Ripple case altogether.
So, how should investors position themselves right now? According to investor Johnny Rice, the sidelines are still the place to be.
Rice acknowledges that with the SEC’s changing of the guard, a friendlier SEC is “certainly great news for XRP, and if the SEC indeed confirms it is not pursuing an appeal, I think it’s likely XRP’s price will rise.” However, he goes on to add, “I’m not convinced that it has long-term value.”
XRP’s primary value lies in its ability to make banking and financial transactions faster and cheaper. But even if XRP were to be adopted across the industry, the annual revenue from transactions would be a small fraction of the $193 billion generated in 2023. This, says Rice, makes XRP’s current market cap, which exceeds $142 billion, seem disconnected from its “inherent value.”
Another common belief driving expectations for XRP’s rise is that financial institutions adopting the technology will need to purchase large amounts of XRP to transact on the network. This would, in theory, drive up demand and value. The issue here, according to Rice, is that banks don’t necessarily need to use XRP itself to benefit from its network. If they can transact using other currencies, they probably will. Additionally, banks are generally hesitant to hold large amounts of a highly volatile asset like XRP.
Dubious of its long-term value, Rice thinks that for those eyeing opportunities in crypto, there’s a far more obvious and appealing asset.
“Bitcoin is my pick for a digital asset that has a real chance of beating the market for years to come.” (To watch Rice’s track record, click here)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
