Sep 27, 2024

6thTrade

By October 7, the SEC’s opportunity to appeal its lawsuit against Ripple Labs will officially close, sparking heated discussions among legal experts, including John Deaton, on what the regulator might do next.

Is an SEC Appeal a Good Idea?

John Deaton, a legal representative for XRP holders with intimate knowledge of the case, believes appealing the secondary sales ruling would be futile. Deaton argues that Judge Analisa Torres made a well-calculated decision in ruling that XRP sold on secondary exchanges does not qualify as an unregistered security. He explained that if the SEC challenges this part of the ruling, the appellate court is unlikely to find that Judge Torres misapplied the Howey Test’s third prong.

Deaton pointed out that Judge Torres didn’t depend on expert testimony focusing on XRP holders, which weakens the SEC’s ability to argue that a "common enterprise" existed—a key element in proving a security under the Howey Test. As someone who has been deeply involved in the Ripple case for over two and a half years, Deaton is confident that even if the case were sent back to Judge Torres, she would still likely rule in Ripple’s favor.

Ripple Case and the SEC’s Softer Stance

While the U.S. still lacks clear regulatory guidelines for the crypto market, there have been some shifts in how the SEC approaches the space. Recently, the SEC has stopped using the term "crypto asset securities" in legal filings, signaling a possible softening of its position.

The Ripple case itself resulted in a split decision. Ripple was fined $125 million for selling XRP to institutional investors, but the ruling in favor of secondary market sales was a major win for the company. With an election year approaching, the SEC may be reluctant to appeal and risk casting the current administration in a negative light.

XRP’s Market Performance and Future Outlook

Meanwhile, the broader cryptocurrency market has seen a revival since the U.S. Federal Reserve cut interest rates by 50 basis points in late 2024. Bitcoin (BTC), Ethereum (ETH), and many altcoins have posted strong gains. However, Ripple’s native token, XRP, has lagged behind, trading mostly flat on both a weekly and monthly basis. XRP has only risen 1.6% since last month, while BTC, Binance Coin (BNB), and Dogecoin (DOGE) have seen increases of 9%, 11%, and over 21%, respectively.

Despite this underperformance, October is often seen as a bullish month for the crypto market. Ryan Lee, Chief Analyst at Bitget Research, sees a bullish scenario for XRP, predicting the token could surge by 30% to reach $0.75. Lee attributes this optimism to the overall positive market sentiment and the potential for favorable legal developments in Ripple’s ongoing battle with the SEC.

From a technical perspective, Lee noted that XRP has already broken through a key trendline, often viewed as a bullish signal. The token is trading above its 50-day, 100-day, and 200-day moving averages, and other indicators like the MACD and RSI suggest a bright October for XRP holders.

The Downside Risks

While the forecast for XRP looks promising, there are still risks. Lee warned that if the SEC does appeal, or if there are negative developments in the legal case, XRP could fall to its $0.45 support level. He also cautioned that too many analysts predicting “parabolic growth” could lead to the opposite effect, with inflated expectations driving a potential sell-off.

To avoid being caught in the hype, Lee advises investors to be cautious. Instead of making emotional decisions, he suggests setting stop-losses and making incremental purchases to better navigate the unpredictable market.

Conclusion

The Ripple v. SEC case continues to hold significant weight for both XRP’s future and the broader cryptocurrency industry. As the appeal window closes, Ripple appears to be in a strong position, but investors should remain aware of the potential risks and avoid jumping on extreme predictions without proper risk management.

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Disclaimer: The content of this article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments are highly volatile and may lead to substantial financial loss. Always perform your own research and consult a qualified financial advisor before making any investment decisions. The opinions expressed are solely those of the author and do not represent the views of the publisher or its affiliates. Investing in cryptocurrencies involves inherent risks, and past performance is not a reliable indicator of future results. Please exercise caution.