XRP Sales Bearish In Short Term, Bullish In Long Run
While XRP is controversial for a number of things, arguably the most scrutinized facet of the cryptocurrency is the fact that Ripple Labs, a fintech company based out of San Francisco, owns a large portion of the tokens and frequently sells some of their stashes on the market to the tune of hundreds of millions of dollars.
Mati Greenspan, former senior analyst at eToro and current founder of Quantum Economics, recently weighed in on these controversial sales:
XRP sales are short term negative for price, long term positive for the ecosystem.
Yes, I've made the same argument in the past several times. XRP sales are short term negative for price long term positive for the ecosystem.
-Banks using Ripplenet without XRP
-regulatory concerns also seem brushed over
— Mati Greenspan [tweets are not trading advice] (@MatiGreenspan) January 9, 2020
Ripple itself seemingly agrees with the sentiment that the sale of XRP to institutions and other entities is bullish for the entire ecosystem that surrounds the cryptocurrency, which unsurprisingly includes the company itself.
Last year in an interview, Ripple CEO Brad Garlinghouse said that he believes his firm has a solid balance sheet. Although he didn’t discuss what contributed to that balance sheet, the company was selling hundreds of millions of dollars worth of XRP over the months prior to that interview.
Garlinghouse claimed in that same interview that Ripple will take advantage of its strong balance sheet by pushing forward with business deals and operations that will help increase the adoption of its services and satisfy the company’s many institutional partners.
This would also suggest that yes, while XRP’s sales on the market may be bearish in the short term (Garlinghouse begs to differ, citing the high volumes and the thus potentially negligible effect of its sales), said sales have a potential to make a long-term positive effect on the entire ecosystem.
“XRP is a Security” Discussion Remains
Although Greenspan and Ripple both agree that the sale of XRP is bullish from a longer-term macro perspective, there are still concerns about the cryptocurrency itself, specifically about the altcoin’s potential to be classified as a security by the U.S. Securities and Exchange Commission. Should this take place, the entire ecosystem surrounding the cryptocurrency could be dramatically affected.
While the SEC and courts have not yet decided on the legal status of XRP, a case is seemingly building for the asset’s classification as a security.
Mike Dudas, CEO of The Block, recently shared two presentations on the cryptocurrency and its relation to Ripple.
"@Ripple Labs is facing a Federal class-action lawsuit alleging that $XRP was sold as an unregistered security. New evidence suggests that 1) Ripple created $XRP, and 2) that the company and its agents are selling the asset in excess of need for profit." https://t.co/mo2RquhQ4p pic.twitter.com/15056vykny
— Mike Dudas (@mdudas) January 9, 2020
The presentations weren’t attributed to a name nor dated, though they conveyed a comprehensive case that “Ripple created XRP, and that the company and its agents are selling the asset in excess of need for profit.”
Should this be true, that would mean XRP may be classified as an unregistered security, allowing a class of victims to win an ongoing lawsuit.
Photo by Jakub Kriz on Unsplash