- RippleNet is promising; XRP is not
- Minor legal wins are lifting XRP’s price
- Swing trading XRP might be the best course of action
Ripple’s (XRP-USD) XRP made strong gains in the past month. The digital token has been up to over 20% in the past 30 days, as the market prices in the positive developments in its dispute with the Securities and Exchange Commission (SEC). Despite the favorable developments in the case, there is still plenty of uncertainty with XRP-USD as a long-term bet.
Ripple Labs is the company behind its namesake payment protocol and exchange. Roughly a decade ago, it created its first digital currency, XRP, to facilitate online money transfers. CEO Chris Larsen thinks that Ripple “is the first viable alternative to correspondent banking.”
Fast forward to December 2020, the SEC sued the crypto platform and its executives for alleged illegal sales of unregistered securities about XRP. The delays in the case have taken a toll on the XRP token and its prospects. Also, Larsen’s tall claims about Ripple are a stretch that hardly justifies a long-term case.
What are RippleNet and XRP?
Investors often confuse RippleNet and XRP, which muddles their perception of the Ripple token. RippleNet is a global payments platform enabling multiple financial institutions to make low-cost payments across 40 different countries. XRP is a digital currency and native asset of the XRP ledger. RippleLabs, the company behind the two, owns over 50% of the total XRP in existence, which it can release at any point. Moreover, nothing can stop it from producing coins, if so desired.
Ultimately the goal for RippleLabs is to promote its payment system and use XRP as a tool for its development. RippleNet deploys its On-Demand Liquidity (ODL) service to use XRP to bridge currencies. The payment platform isn’t compelled to use XRP but hopes to increase adoption in the coming years.
To be sure, mainstream adoption of XRP seems highly unlikely at this point. I don’t expect banking institutions to accept a platform embroiled in so much controversy. Moreover, with XRP being a public blockchain, financial organizations are likely to be sensitive about transactional information.
Is XRP A Long-Term Bet?
XRP is one of the few cryptos that failed to get going during the pandemic. Due to its tussle with the SEC, it failed to get going at a time when most of its peers were posting record gains. However, if it could emerge victorious in its case with SEC, recovery could be on the cards. However, a long-term case is tough to build for XRP at this point, based on the points discussed earlier.
Assuming things go south for XRP, who’s to say RippleNet won’t use another different crypto as a settlement base? It could also start a new one from scratch or meddle with XRP’s supply. Nevertheless, minor legal victories can spark intense retail action for the token. Positive developments in its case during April, May, and October last year triggered an incredible rally in XRP’s price.
In February this year, it gained 30% after it got permission to explain its fair notice defense against the SEC. Similarly, in March, the presiding judge denied the agency’s motion against Ripple’s fair notice defense. Looking at these events, XRP could perhaps be an interesting short-term play until the dust settles on its regulatory crisis.
Bottom Line on XRP-USD
A lot is riding on the SEC’s case on Ripple for the broader crypto market. However, for XRP, a positive result is unlikely to kick start a massive rebound, as some investors think. Volatility is perhaps the only certainty with Ripple, and it could be a great time for its investors to rake in some profits.
Its regulatory documents and the suggest that the case continues into the fourth quarter this year. That should give plenty of time for investors to take advantage of the swings in its price stoked by the latest on the SEC lawsuit against Ripple.
As always, though, it’s best to invest only an amount you can afford to lose in the crypto market. The market will remain volatile as ever, which is why it’s best to invest in coins with substantial use-cases and relatively stronger outlooks such as XRP.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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