Good news for Ripple (XRP)

While this is indeed definitely a victory for transparency, it may not have a significant impact on the final outcome of the process. 

It is worth mentioning that it has been almost two and a half years now that the lawsuit has been proceeding without reaching a conclusion, although perhaps the documentation that the SEC has to deliver could help Ripple. 

Security or commodity

The SEC has accused Ripple of selling XRP as an unregistered security, that is, an investment contract that was not previously filed with the SEC as should be mandatory in such cases. 

Ripple, on the other hand, argued that XRP was not a security, but a commodity, and therefore they had no registration requirement. 

The documentation that the judge ordered the SEC to submit concerns explicit statements from June 2018 in which the former director of the SEC’s finance division states without half-measures that ETH (Ethereum) was not a security. 

Indeed, very few people believe that ETH is a security, so it is not at all strange that even some members of the SEC itself consider it a commodity like Bitcoin. 

For XRP, however, the argument might be different. 

The fact is that Ripple’s lawyers probably believe that among the reasons that led the SEC to consider ETH not a security in 2018 might be some that could help to consider XRP a commodity as well. 

This is why Ripple’s small victory in court produced an increase in XRP’s market value.

The trend of XRP

The year 2023 opened with a price of XRP below $0.34. 

It is worth noting that in October last year it had also risen above $0.53, which is well above even the current $0.44. 

In January it had already risen above $0.42, while in late March it also rose above $0.54. Since then it had fallen back to just above $0.42 until a week ago, and then lateralized to that level until yesterday. Today it rose to almost $0.46, only to fall back below $0.45. 

It is worth mentioning that in June last year it had fallen as low as $0.30. 

As can be seen from these figures, over the medium term the market value of XRP seems relatively stable. 

Over the long term, on the other hand, it appears to be more variable, although it is significantly so almost exclusively during speculative bubbles. 

In 2017/2018 it even rose for a very brief moment above $3.84, only to plummet below $0.2 in the subsequent bear-market. 

In late 2020, before the start of the last big bullrun, it was just under $0.24, which is a figure not far below last year’s low peak. 

Moreover, the 2021 bubble only brought the price above $1.6, which is less than half the all-time high of early 2018. 

Finally, in May last year, before the implosion of the Terra/Luna ecosystem, it was just under $0.80, which is almost double its current value. 

The conclusion of the lawsuit

It may prove difficult to trigger significant movements in the price of XRP over the medium term until it is clear how the SEC lawsuit will conclude, unless there are black swans or new bubbles. 

Indeed, the relatively low volatility of XRP in recent years, relative to that of ETH for example, may be due precisely to the uncertain outcome of the lawsuit, which began in November 2020 and has not yet reached any conclusion, even a partial one. 

In fact, even partial news, such as today’s small victory, fails to lock in the price much more, merely raising volatility slightly in the short term.

If one adds to this the fact that the SEC now seems intent on questioning even the nature of Ethereum as a commodity, the situation does not look as positive as it might appear after today’s gain.