Check out the latest news with Ripple (CCC:XRP-USD), and it’s clear its chance of beating its Securities and Exchange Commission case remains strong. Yet, this by itself doesn’t guarantee this altcoin has a clear path to higher prices.
As I broke it down in my last article on Ripple, it’s still too early to buy it ahead of a possible courtroom victory. A decision in the case, or even a settlement, is still months away. This may mean increased investor impatience and a further drift lower.
My prior concern (investor impatience) may now be less pronounced, as the time between now and decision day narrows. But now, crypto market uncertainty could be what sinks Ripple in the meantime. Forthcoming upgrades could help spur a return to the bull market that came to a halt in May.
But if this fails to do the trick and retail investors/traders continue to move out of this asset class, the downward pressure could send Ripple considerably lower. Considering this, the best move continues to be wait and see with Ripple.
If cryptos across the board correct again, buying at lower prices ahead of the Ripple court decision could be a worthwhile move.
Ripple’s Odds Are Getting Better
In the months since the case of SEC vs. Ripple Labs began, the defendant in this case (XRP’s developer) succeeded in putting the securities industry watchdog on the defense. As seen from the latest news, this continues to be the case.
As you may have heard, Ripple scored another victory as the judge in the case has allowed it to bring in Bill Hinman, a former SEC director, for questioning on July 27. What’s the importance of Hinman? In 2018, Hinman stated in a speech that Ethereum (CCC:ETH-USD) was not a security.
Why’s that important? If Ripple Labs can establish that its token, is similar enough to ETH, it may be tough for the SEC to prove its allegation that the sale of XRP tokens was an unregistered securities offering.
This is by all means a positive for its chances in beating the SEC’s case. But I wouldn’t go as far to say case closed. We are still months away from a decision. Other factors that could sink it in the meantime haven’t gone away.
What’s the main one now? Increasing concern of a further across-the-board slide for cryptos. This may result in a further pullback before decision day (projected to happen in September).
XRP Could Head Lower
Investors buying Ripple today at around 58 cents may anticipate it going back to $1 (or higher) if it wins in the courts a few months from now. But, who’s to say this altcoin won’t make another move lower between now and then? Sure, worrying about near-term volatility may be small potatoes if you’re expecting it to double.
But there’s still much to suggest you can snap Ripple up at a substantially lower price, even ahead of the court case wrapping up. The risk facing Ripple could have more to do with the state of the overall cryptocurrency market.
Cryptos across the board, ranging from established ones like Bitcoin (CCC:BTC-USD) and Ethereum, have failed to bounce back. The same has happened with so-called Ethereum killers like Cardano (CCC:ADA-USD) and Polygon (CCC:MATIC-USD).
No longer seeing it an area to make fast money, retail speculators are continuing to lose interest in this asset class. They’ve managed to avoid another correction, like the one seen in May.
Yet if sentiment continues to trend in its current direction, we may see another major sell-off between now and September.
What does this mean for Ripple? Instead of buying it for 58 cents, in hopes it gets back to $1, you may be able to buy it at 30 or 40 cents ahead of it possibly making a parabolic move on headlines of its (possible) victory against the SEC.
Wait and See
Given its lower utility relative to Ethereum and other highly DeFi-compatible altcoins, the rationale behind buying XRP remains as a binary bet that it will win its courtroom battle with the SEC. Recent news is encouraging, but the final decision remains months away.
In the meantime, with uncertainty still clouding over the cryptocurrency market, another sell-off could be on the horizon. Instead of running into Ripple, taking a wait-and-see approach remains your best option.
On the date of publication, Thomas Niel held long positions in Bitcoin and Ethereum. He did not have (either directly or indirectly) any positions in any other securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.
