XRP is mooning again, so we asked to 2 pro crypto investors; what’s going on?

]

Link copied to

clipboard

Ripple’s XRP token has been back on the ramp, as the bulls stay in control of broader crypto markets.

And while alt coin season is in full effect, XRP has posted a 5x return in 2021 to-date.

It’s also doubled in April, and this week traded above $US1 for the first time in over three years.

So we asked a couple of pro crypto investors — what’s going on? But before that, a bit of history:

XRP – some background

Ripple Labs was founded back in 2012 — a relative eternity by crypto standards.

It was established with the goal of deploying blockchain technology to speed up transaction times for fund transfers between financial institutions.

The concept was strong enough to attract a $US55m funding round in late 2016, just before the first major crypto bull market.

By that point, Ripple had already taken on investments from big names such as Google Ventures and Andreesen Horowitz. The platform also created its own cryptocurrency, XRP.

When crypto went parabolic in 2017, the fiat value of XRP tokens soared from around US15c to a high of $US3.50. But banking adoption rates failed to materialise, and a few controversies have followed.

In 2019, Ripple inked a deal with Nasdaq-listed forex platform MoneyGram (MGI) to integrate its technology as part of MGI’s global transfer network.

Fast forward to 2021, and MGI dropped something of a bombshell by advising it has been paid handsomely (by Ripple) to use Ripple’s liquidity platform — to the tune of more than $US60m in incentive fees.

Moneygram has now ended the partnership, and Ripple’s founders are fending off a lawsuit brought by the US Securities and Exchange Commission (SEC) in December.

The SEC thinks XRP is a centrally-issued security (not a decentralised commodity, like Bitcoin).

It also alleges the founders didn’t register XRP properly, before issuing over 14 billion units and generating over $US1.3 billion in fiat currency (partly to enrich themselves).

It’s a serious allegation, and trading in XRP tokens has been banned on leading US exchange Coinbase.

The response so far from Ripple investors? We do not gaf:

Investor view

So, what’s all the fuss about? To get the expert view we spoke with two pro investors in the space.

Alex Saunders is the founder of industry news website Nugget’s News and the recently launched crypto education platform Collective Shift.

Stockhead also spoke with Matt Harcourt, an analyst at Australian crypto investment firm Apollo Capital.

Neither is an XRP advocate.

“For me it’s just a no-brainer that their software isn’t that good,” Saunders said.

“There’s no need to use XRP tokens. Visa can use stable coins and send funds direct — why do you need this token in the middle?”

He also agrees that ownership of XRP tokens is largely centralised.

“They’ll try and claim its decentralised but it’s all smoke and mirrors. To me (the platform) is already obsolete and outdated when you look at the tech available in DeFi.”

DeFi (decentralised finance) is also Harcourt’s specialty area, where Apollo runs two investment funds based on ‘yield farming’ in the DeFi ecosystem.

“We’re big DeFi investors,” Harcourt said.

“For us there’s value in locking your capital up in set protocols and earning yield on that capital, because your funds are providing a service.”

For Harcourt, the value of a platform like Ethereum is the network effect.

“And what really drives that network effect are the valuation protocols that are built on top of it,” Harcourt said.

“With XRP, the network effect would be recognised through its adoption by banks and financial institutions to improve the speed and cost of international transactions.”

“But I think in their entire history, there’s no real evidence of that occurring.”

Flows before pros

Along with a relative lack of actual adoption, Ripple has faced some major headwinds in 2021.

But in response, XRP tokens have ramped 5x. So is there more to the story?

Broader sentiment in the market remains bullish. Liquidity is plentiful, and that’s not just a crypto story — equities have also benefitted from historic levels of post-COVID stimulus.

In other words, flows sometimes trump fundamentals.

Harcourt observed that although XRP trading has been banned on Coinbase, huge global exchanges such as Binance aren’t being prevented from making the market.

“There’s always going to be (exchanges) that keep trading XRP because they can make money on the massive amount of volume,” Harcourt said.

“Binance are a profit-making entity. There’s been almost $US4bn of trading volume in XRP on Binance over the past 24 hours, so they’re making a lot of fee revenue out of that.”

How much fee revenue? Binance is privately held, but Coinbase is listing on the NASDAQ next week. And based on data from Nasdaq’s private market activity, it will be go public with an indicative valuation of $US90 billion.

“It’s definitely a global market. As a side-anecdote, I’ve got mates from school who are wholeheartedly invested in XRP,” Harcourt says.

“When you get to this stage in the cycle, you definitely have a lot of people jumping in who don’t think they have time to figure out the asset class in-depth.”

In that context, both Saunders and Harcourt said other factors come into play — such as where coins are ranked by market capitalisation.

As one of the older cryptos with a huge amount of volume on issue, XRP sits comfortably in the top 10. And at $1, its entry price is a bit easier to stomach than Bitcoin (almost $US60,000).

“It (XRP) can be a bit of a religion. You’ve still YouTubers or guys on Twitter telling retail followers that it’s going to $500,” Saunders said.

“There’s still projects in the top 10 that I believe have got zero value. That’s starting to change but the market is still maturing.”

Harcourt also thinks the XRP faithful see the SEC lawsuit as more of a “bump in the road”.

He raised the prospect that Ripple ends up getting “a slap on the wrist” from regulators “but nothing near the treasury they hold, and then they’d keep going business as usual”.

And as an investment firm, Apollo is wary of the XRP army.

“When the SEC news came out I did some digging and we were looking to see if (XRP) would be a good short opportunity,” Harcourt said.

“But we decided against it, because we think the investor base is a bit irrational and lack the fundamental understanding of cryptocurrency.”

As the hedge funds that shorted GME stock would know, it pays to be watchful of flows in post-COVID asset markets, lest the pros get left under water.

Subscribe to our daily newsletter

Join our small cap Facebook group

U.S. is ‘behind the curve’ on crypto regulations, says SEC Commissioner Peirce

]

A top financial regulator warned that the U.S. is falling behind other countries in constructing a rational regulatory framework for the blockchain and cryptocurrency industries, and that this failure threatens to deprive the U.S. economy of the benefits of new innovations.

“I think we’re certainly falling behind the curve,” said Hester Peirce, one of what will soon be five commissioners at the Securities and Exchange Commission, during an interview at MarketWatch’s Investing in Crypto virtual event series Wednesday. “We’ve seen other countries take a more productive approach to regulating crypto. Our approach has been to say no and tell people wait…we need to build a framework that is appropriate for this industry.”

Read more: Blockchain firm LBRY tries to rally sector against SEC; critics allege a ‘cryptocurrency suppression program’

Cryptocurrencies and blockchain-related financial services companies are regulated by a number of federal and state agencies, including the SEC, the Commodity Futures Trading Commission, the U.S. Treasury Department and Federal Reserve, among others, and the industry has long complained that this complicated structure makes it difficult to understand the rules of the road.

Peirce said she hopes Congress will step in to “draw some lines” and “urge us to come together as regulators and figure out what falls where,” so that entrepreneurs have a clear understanding of regulatory policy regarding cryptocurrency. She expressed optimism that Gary Gensler, who is on track to be confirmed as the next chairman of the SEC, will be able to use his experience as CFTC commissioner to enable a constructive working relationship between the two capital markets regulators.

Peirce also addressed the issue of central bank digital currency, in light of China’s recent unveiling of a digital yuan and as the Federal Reserve is currently studying the possibility of issuing a new, blockchain-enabled digital dollar.

She noted that private stablecoins, or cryptocurrencies that aim to peg their value to some other asset, like the U.S. dollar DXY, -0.09% , could serve the same role as a government-backed digital currency, and have already proven their popularity. Meanwhile, she argued that the decentralized nature of some cryptocurrencies are where the “real power” of the technology resides. “Some of the weakness in our financial system comes from its concentration…you can make a more robust system” by relying more on decentralized elements, like the cryptocurrencies bitcoin BTCUSD, +1.11% or ethereum ETHUSD, +1.02% .

See also: Bitcoin, crypto investors will be watching these 5 questions facing the Biden administration

For those investors who are worried that the U.S. government will soon crack down on the use of cryptocurrencies in the name of investor protection or in order to maintain better control of the money supply, Peirce had some reassuring words.

“I think we were past that point [where governments could effectively ban crypto] because you’d have to shut down the internet,” she said. “A government could say it’s not allowed here, but people would still be able to do it and it would be very hard to stop people from doing it. It would be a foolish thing” for a government to attempt, Peirce said.

The Crypto Daily – Movers and Shakers – April 7th, 2021

]

Bitcoin, BTC to USD, fell by 1.95% on Tuesday. Reversing a 1.55% gain from Monday, Bitcoin ended the day at $57,991.0.

A mixed start to the day saw Bitcoin rise to an early morning intraday high $59,499.0 before hitting reverse.

Falling short of the first major resistance level at $59,980, Bitcoin fell to an early afternoon intraday low $57,401.0.

Bitcoin fell through the first major support level at $57,580 before briefly revisiting $58,200 levels.

Failing to move back through to $59,000 levels, Bitcoin eased back to end the day at sub-$58,000 levels.

The near-term bullish trend remained intact supported by the recovery from sub-$55,000 levels. For the bears, Bitcoin would need to slide through the 62% FIB of $26,041 to form a near-term bearish trend.

The Rest of the Pack

Across the rest of the majors, it was a mixed day on Tuesday.

Crypto.com Coin and Polkadot slid by 7.12% and by 3.57% to buck the trend and join Bitcoin in the red.

It was a bullish day for the rest of the majors, however.

Ripple’s XRP jumped by 19.75% to lead the pack, with Binance Coin (+9.63%), Chainlink (+7.38%), and Litecoin (+7.08%) also on the move.

Bitcoin Cash SV (+1.79%), Cardano’s ADA (+3.40%), and Ethereum (+0.26%) trailed the front runners, however.

In the current week, the crypto total market fell to a Monday low $1,815bn before rising to a Tuesday high $1,992bn. At the time of writing, the total market cap stood at $1,928bn.

Bitcoin’s dominance rose to a Monday high 58.43% before falling to a Tuesday low 55.77%. At the time of writing, Bitcoin’s dominance stood at 56.31%.

This Morning

At the time of writing, Bitcoin was up by 0.24% to $58,133.0. A mixed start to the day saw Bitcoin fall to an early morning low $57,958.0 before rising to a high $58,189.0.

Bitcoin left the major support and resistance levels untested early on.

Elsewhere, it was a mixed start to the day.

Binance Coin (-0.46%), Polkadot (-0.61%), and Ripple’s XRP (-0.29%) saw red to buck the trend early on.

Story continues

It was a bullish start to the day for the rest of the majors, however.

At the time of writing, Crypto.com Coin and Litecoin were up by 1.89% and by 1.73% to lead the way.

For the Bitcoin Day Ahead

Bitcoin would need to move through the pivot level at $58,297 to bring the first major resistance level at $59,193 into play.

Support from the broader market would be needed for Bitcoin to break back through to $59,000 levels.

Barring an extended crypto rally, the first major resistance level and resistance at $59,500 would likely cap any upside.

In the event of an extended crypto rally, Bitcoin could test resistance at the March swing hi $61,699 before any pullback. The second major resistance level sits at $60,395.

Failure to move through the $58,297 pivot would bring the first major support level at $57,095 into play.

Barring another extended sell-off on the day, Bitcoin should steer clear of the second major support level at $56,199.

This article was originally posted on FX Empire

follow us