The Wolf Den #774 - RIPPLE WINS
F**K YES!
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In This Issue:
RIPPLE WINS
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
Banks Can’t Be Trusted
Alex Mashinsky Arrested!
Bitcoin To Pump In The Coming Months... But I Am Selling Stocks! | James Stickland & The Chart Guys
RIPPLE WINS
WE DID IT. WE BEAT THE SEC. WE WON.
My excitement is palpable as I write this. After enduring a period of what felt like unjust punishments and targeted broad sweeping assaults, we finally have a victory to our credit. The tide has changed in the industry, and the SEC's domination is faltering.
It was about two and a half years ago, 934 days to be exact, when Ripple found itself blindsided by a lawsuit from the SEC, accusing it of selling unregistered securities. This resulted in nearly all major U.S. exchanges delisting XRP, and its price taking a significant dive as the broader consensus started viewing the entire altcoin sector as carrying regulatory risk.
I confess that I have criticized Ripple in the past, but I've always held that their treatment at the hands of the SEC was undeserved - the SEC, in my opinion, has been the real adversary. I've consistently maintained that a victory for Ripple would resonate as a win for the entire industry. Today, that day has arrived, and it feels fantastic.
Before the SEC launched its massive lawsuit against Ripple, it had been on a winning spree against the crypto industry. From individuals to teams to major industry players like Bitfinex, Mt. Gox, Bitconnect, Telegram, EtherDelta, and others, the SEC had been notching up victories left and right.
The SEC's growing power made their lawsuits progressively more draconian, and their tactics increasingly dubious. As time passed, the Ripple case became much more than a lawsuit against an altcoin; it became a beacon for all altcoins, representing a significant portion of our industry and embodying a victory we urgently needed.
To provide a little background for those not familiar with Ripple, it has been one of the more centralized entities in crypto. The lawsuit's implications suggested that if XRP wasn’t deemed a security, then most altcoins also wouldn’t be classified as such. However, if XRP was deemed a security, then no altcoin would be safe.
This win for Ripple against the SEC essentially represented an all-or-nothing scenario for the industry, and we desperately needed this victory.
Now, with a defensive stance to maintain and a win under our belt, let's delve into some details of the ruling.
First and foremost, taken from page 15 of the judge’s decision, “XRP, as a digital token, is not in and of itself a “contract, transaction[,] or scheme” that embodies the Howey requirements of an investment contract.” In other words, the judge has found that XRP token in it’s current form is not a security.
In line with this decision, Judge Torres also determined that programmatic sales, other distributions (including employee compensations, bounties, and initiatives), as well as Larsen’s and Garlinghouse’s sales, do not constitute security offerings. However, institutional sales and fundraising for XRP were classified as security offerings.
I won't delve too deeply into the implications of this as the news is still fresh and incomplete, and it also falls into the realm of legal interpretation. However, my non-professional assumption is that the SEC will likely classify ICOs, IEOs, IDOs, launchpads, and OTC VC deals as security offerings going forward. The reason being the SEC's view that early investors in these contexts have a clear expectation of profit. Here is some supporting evidence.
As seen on page 17 of the decision, “Ripple controlled all of the (instituional) accounts and used the funds raised from the Institutional Sales to finance it's operations. Further, each Institutional Buyer’s ability to profit was tied to Ripple’s fortunes and the fortunes of other Institutional Buyers because all Institutional Buyers received the same fungible XRP.”
Although this can be quite complicated, what I gather from this is that VC activity, according to the Ripple decision, will have to shift to public platforms, namely centralized exchanges... think Coinbase in the U.S.
For a comprehensive legal opinion on the matter, I highly recommend you follow Stuart Alderoty, Ripple's Chief Legal Officer, see below:
Alderoty's thread essentially encapsulates Judge Torres’ final decision, see below:
Now, let's shift our focus from the legal aspects to the exciting ramifications.
Firstly, congratulations to all XRP diamond hand holders who will soon witness the asset's return to major exchanges in the U.S. Kudos to you.
Secondly, XRP's victory is a significant boost for altcoins in the U.S., particularly those embroiled in court filings, being labeled as securities: Solana, Cardano, BNB, MATIC, FIL, and of course, ETH. While nothing is legally definitive for these other altcoins, it seems reasonable to expect - and this is not legal advice - that these coins will find similar favorable outcomes if they have their day in court. They have suffered harm at the hands of the SEC by merely being named securities in enforcement actions against other companies. My opinion is that they should sue the SEC for market manipulation and harm.
Thirdly, Coinbase emerges as a winner for several reasons following the decision: firstly, it can relist XRP and increase its revenue, secondly, it will see additional flows due to the ruling on institutional sales, which will force VCs to bid alongside retail investors on a fair platform, and lastly, the lawsuit against Coinbase seems more likely to be favorable if XRP is not considered a security - this could be why Coinbase's stock has gone parabolic. The core SEC argument against Coinbase is that they are selling unregistered securities. If the secondary sale of XRP is not a security, then the SEC’s case holds little water.
Fourthly, this verdict should theoretically improve the chances of a spot Bitcoin ETF being approved, and perhaps an Ethereum spot ETF later on. One of the obstacles to the ETF was the Coinbase lawsuit, which now looks more optimistic, plus with the SEC taking a hit, this could give our industry the legitimacy it has long sought. The SEC now has less wiggle room to impose its power on the industry. Imagine the sweetness of a spot Bitcoin ETF, an Ethereum ETF, and potentially a staked Ethereum ETF at some point - the ingredients for a bull run of historic proportions.
And finally, for good measure, a resounding F YOU to Gary Gensler.
This case will be appealed by the SEC. It could end up in the Supreme Court. But for today, this is a resounding victory.
I haven't felt this euphoria in crypto for a while, and it feels incredible to experience it again. I still believe we are at the beginning of a bull run, indicating there's still plenty of room left in this cycle. However, remember this feeling because when we experience this again, it may be an indication that the market is turning around.
Hats off to Ripple for putting up a fierce fight and preserving the industry's vitality. The industry owes you one. We, as crypto investors, were in dire need of a surprise victory, and we finally got it when we least expected it. I am optimistic about more good news to come, but tonight, I will sleep peacefully, knowing we gave the SEC a run for their money and can continue to grow. It feels good to be a crypto investor, and I am grateful you are all here to enjoy the ride with me.
Have a fantastic weekend.
Bitcoin Thoughts And Analysis
As exciting as all of the news was yesterday, Bitcoin did not benefit in a major way. It is still range bound locally (red zone) and finding rejection at resistance. Further, it looks like the bearish divergence is likely to become worse, although we need to wait for the close today to see a clear elbow down in RSI.
I am still being cautious with Bitcoin here, as we could see a dip down before continuation higher. I do still think that dip would be a great buying opportunity, I am just not looking to accummulate more here right at resistance.
Altcoin Charts
A quick note about altcoins. Yesterday’s Ripple decision was a game changer, and we saw massive moves across the board, most notably on coins like MATIC, SOL and ADA that were passively named in lawsuits.
The main argument against trading altcoins - that they may be unregistered securities - has been dampened.
I will be digging deeper for setups in the coming days if things continue to look hot, but we should have a real chance here at altcoin appreciation.
This is the hourly chart, just to give some context as to just how big this move was. I am not sure I have ever seen more short term volume on a coin or such a quick and significant move in a large cap coin. And it is well deserved.
I am not sure what happens to XRP from here - before the decision was clearly the time to be in this asset. But assuming it starts to get relisted on American exchanges now that the status is clear, I would expect that this becomes a more bullish asset and that dips are for buying.
Zooming out to the weekly, this was a somewhat perfect technical move. We have had a major descending resistance in play for over 2 years, the blue line. It was recently broken, retested multiple time as support before price launched off of it. Now price is above all meaningful MAs and the key resistance area of 54 to 58 cents.
That is the area I am bidding, in case price comes back down that far. It should get retested eventually.
Key levels are marked above as targets.
Legacy Markets
This week saw nearly every sector rally — including emerging markets, global bonds, and the S&P 500 — fueled by optimism that the Federal Reserve is making progress in its fight against inflation. Investors experienced significant gains across various asset classes, with MSCI's global stock benchmark jumping 3.5% over the last five days.
Amid the risk-on sentiment, numerous currencies appreciated against the dollar, prompting questions about a potential sustained sell-off of the greenback. This optimism reflects hopes that the US is moving toward a "Goldilocks scenario" with rapidly decreasing inflation and a resilient economy.
On the flip side, treasuries fell on Friday, with the yield on two-year notes rising four basis points to 4.67%. In the corporate world, Microsoft Corp. and Activision Blizzard Inc. rose in premarket trading amid merger news, and UnitedHealth Group Inc. saw gains following a strong earnings report.
In Europe, Nokia Oyj and Ericsson saw declines, while Swiss money manager Partners Group Holding AG surged. Meanwhile, commodities like oil and gold are on track for weekly gains.
Despite this optimism, Fed officials continue to caution that more rate hikes may be necessary to keep inflation in check. Investors now await earnings reports to continue the rally, with a focus on corporate outlooks. Most Asian stock indexes also advanced, with the yen on a seven-day winning streak.
Key events this week:
US University of Michigan consumer sentiment, Friday
US banks kick off earnings, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 6:19 a.m. New York time
Nasdaq 100 futures were little changed
Futures on the Dow Jones Industrial Average rose 0.1%
The Stoxx Europe 600 was little changed
The MSCI World index rose 0.1%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.1223
The British pound fell 0.1% to $1.3118
The Japanese yen fell 0.4% to 138.64 per dollar
Cryptocurrencies
Bitcoin fell 0.7% to $31,170.75
Ether rose 0.4% to $1,993.64
Bonds
The yield on 10-year Treasuries advanced two basis points to 3.79%
Germany’s 10-year yield was little changed at 2.49%
Britain’s 10-year yield was little changed at 4.42%
Commodities
West Texas Intermediate crude was little changed
Gold futures fell 0.2% to $1,960.20 an ounce
Banks Can’t Be Trusted
These kinds of stories tend to infuriate me more than most, but fortunately, I'm feeling pretty positive today.
For the past decade, the cryptocurrency industry has been subjected to undue scrutiny from top to bottom, while the institutions we're supposed to trust are let off lightly. Bank of America, the nation's second-largest bank, has now been discovered to be unlawfully exploiting hundreds of thousands of customers through their products. Out of curiosity, I looked up the number of violations BofA has committed recently and what I found was unsurprising.
According to ViolationTracker, a free online database that chronicles banking violations, BofA has accumulated 313 recorded violations, with a staggering total violation amount of $87,070,669,824 since 2020. BOA isn't the only perpetrator, this is standard practice for many banks, underscoring our urgent need for a better solution. I'll concede that the crypto space isn't perfect, but the future it promises is significantly brighter. I eagerly anticipate the day when banks are held to account or simply replaced.
On a related note, BofA is reportedly closing personal bank accounts linked to Coinbase for reasons that haven't been made public. Brian Armstrong, attuned to the situation, conducted a poll in which approximately 10% of BofA users indicated they are facing a similar predicament. While these figures might be slightly inflated, the reality of Operation Choke Point cannot be ignored. Although banks might not vanish anytime soon, blockchain and cryptocurrency technology make it more feasible to keep them in check. If BofA continues to act in this manner, it will eventually face the consequences.
Alex Mashinsky Arrested!
In addition to the XRP news, we have the arrest of Alex Mashinsky. The image above is striking and surreal. As you likely know, I had Mashinky on my show numerous times in the past, and briefly (for 3 months in 2020) had Celsius as a podcast sponsor. I was a believer in CeFi, and trusted the word of hucksters like Mashinsky and Steve Ehrlich. The last time he was on, Caitlin Long and Mike Alfred absolutely destroyed him, which gave me a bit of solace.
Alex Mashinsky is unlikely to be let off the hook, as federal prosecutors have accused him of a myriad of fraudulent activities, with charges encompassing securities, commodities, and wire fraud.
Furthermore, I am firmly convinced that the courts will find Mashinsky guilty of artificially inflating the price of CEL while secretly liquidating his positions. It's certainly feasible that Mashinsky may reach a settlement or choose to fight back, but irrespective of the outcome, this development represents another victory for the industry.
Bitcoin To Pump In The Coming Months... But I Am Selling Stocks! | James Stickland & The Chart Guys
My special guests today are James Stickland, CEO of Elwood, a digital asset platform for institutions, and Dan McDermitt aka Charting Man Dan, who will discuss the markets and share his trader's wisdom.
The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.
The site says fines since 2000, not 2020. Keep up the awesome work!!