Ripple verdict is already in question

Peter Slagter Schrijver, spreker en analist Bitcoin Alpha, Descryptor en Satoshi Radio

4 September 2023

A few weeks ago, Ripple recorded a significant win against regulator SEC. The judge greenlit the sale of the XRP token through exchanges. But in another case, a colleague put a bright line through that. Does that mean the end of Ripple's revelry? You can read about that, and more, in this Weekly!

This Weekly in brief

Crypto market: The bitcoin price falls slightly and is now around $29,000. The U.S. central bank raised interest rates by 0.25 percentage point and gave an outlook for possible interest rate cuts in 2024.

News: Just three weeks after the ruling in the case between Ripple and the SEC, it has already become tainted. A colleague is challenging the verdict to substantiate. Once again, this makes it clear that politics is in play!

Behind the scenes: Do you have a personal holding company, foundation or other corporate form? Then you can invest in crypto assets at Amdax with tax advantages.

Crypto market

After a few weeks in which the price moved sideways in a narrow price range, we are now seeing some weakness. Without any sudden, fierce moves, by the way. It is more like a glacier slowly flowing down the mountain.

For five weeks, the $29,600 price offered support. Meanwhile, we are below it and this price is resistance. The low this week was $28,400, also a meaningful price level.

Below $28,400 is the price range we were in when BlackRock announced its ETF offering. If we fall below this price again, you could say that the optimism and hope that BlackRock caused has faded.

That is not a disaster, by the way. It is part of this phase of the market cycle, where hope and despondency alternate. It is precisely the hesitant market, which gives back some of the price gains after each jump up anyway, that offers opportunities to investors who want to build a position during this period.

BTCUSD 2023 08 01 19 25 14

Last Wednesday, Fed Chairman Jerome Powell announced a 25 bps increase in the U.S. policy rate to the range between 5.25 and 5.5 percent. This was exactly as the market had already expected.

The accompanying statement resembled last month like two drops of water. The speech was also largely a repetition of what was already covered in June:

  • We don't expect a recession this year.
  • It will be years before core inflation returns to 2 percent.
  • Policy is inhibiting now, and it will be a long time before its full effect is seen.

But in the press conference, things suddenly got interesting. Journalists asked questions about possible interest rate cuts in the future, and Powell went into detail about the circumstances surrounding that.

At first, he tried to hold off the boat a bit: "We'd be comfortable cutting rates when we're comfortable cutting rates. And that won't be this year, I don't think". And then, "It will be about how confident we are that inflation is, in fact, coming down to our 2 percent goal."

Later he returned to it: "[the projections] are cutting rates next year because, you know, the federal-funds rate is at a restrictive level now. So, if we see inflation coming down credibly, sustainably, then we don't need to be at a restrictive level anymore. We can move back to a neutral level and then below a neutral level at a certain point."

In short, we are braking now (interest rates are above neutral) and if we see that inflation is well on its way to the 2 percent then we will release the brake (reduce interest rates to neutral).

Then we have two more questions. When does Powell expect those interest rate cuts? And how much can interest rates come down then?

To start with the last question, for that we have to look at what interest rate is "neutral" according to the Fed. Powell thought in July 2022 after the rate hike to 2.5 percent that interest rates had moved into "the range of neutral. Meanwhile, they presumably have a different view of that. Based on the Fed's own latest economic forecasts, they would aim for 4 percent.

Then the timing. Powell himself hints at that: "The way I would think about it is you'd stop rising long before you got to 2 percent inflation. And you'd start cutting before you got to 2 percent inflation too, because we don't see ourselves getting to 2 percent inflation until 2025 or so."

The Fed expects to cut interest rates a bit before inflation is fully back to the 2 percent target. In other words, think of a series of small cuts to eventually 4 percent over the course of 2024.

Thus, several driving events may coincide in early 2024. A halving, a bitcoin ETF AND an interest rate cut in the first six months? That would be a lot of tailwinds for bitcoin!

US02 Y 2023 08 01 19 25 21


On December 22, 2020, the SEC filed a lawsuit against Ripple. Over thirty months later, on July 13, 2023, the judge ruled that XRP is not a security in some cases. The media explained the ruling as a historic victory, and we also called it a significant win.

But just three weeks later, Judge Torres' ruling has become tainted with the opinion of colleague Rakoff. This judge is overseeing the case the SEC brought against Terraform Labs and its foreman Do Kwon. You may recognize these names from the debacle surrounding the stablecoin TerraUSD (UST) and its sister coin Luna.

Following Judge Torres' ruling, these defendants asked the court to dismiss the case against them. They argued that no contracts were involved in the sale of UST to consumers and referred to the recently issued Ripple judgment for part of the rationale for their request. The SEC in turn felt that the judge should ignore that very judgment; "it does not conform to prevailing securities rules."

On Monday, Judge Rakoff published his decision. He rejects Terraform Labs' request and explains why he disagrees with the Ripple ruling. In it, he returns to Howey, a widely used test to distinguish between securities and other types of financial products. "That one does not distinguish between [different types of] buyers," Rakoff says. Thus, he taints the Ripple verdict by challenging its rationale. The case against Terraform Labs continues.

Besluit Rakoff 2

This does not mean that the judgment in the case between Ripple and the SEC is no longer valid. It makes clear that it is not a done deal, should the regulator appeal. This is simply because U.S. securities law says nothing explicit about crypto assets. Therefore, lawsuits related to it are open to interpretation above average.

Back for a moment to the Weekly from two weeks ago. We like to underscore what we wrote in it about the Ripple case: "The risk for altcoin traders is that the joy of victory is premature and exaggerated." As long as lawmakers remain silent, we can expect more clashing views, including from judges.

Other news:

  • Already some 60,000 European charging stations are 'lightning enabled'. German startup Satimoto announced this on Twitter. "This map shows all charging stations available in our app," Satimoto writes. "At all those charging stations you can check out with pseudonymous, streaming lightning payments."
  • FTX publishes plan for relaunching the exchange. It distinguishes between international and U.S. creditors. The first group may choose to revive the exchange. Members of the group then become shareholders of the newly created entity and waive any rights attached to holding FTT tokens. Americans cannot participate in this structure.
  • KPMG recognizes the positive effects bitcoin mining can have on the climate. Among other things, the consulting firm cites driving renewable energy production, the unique role of miners in balancing supply and demand and reducing methane emissions. In addition, KPMG cites several social benefits, including financial inclusion and fundraising. "Bitcoin appears to offer a number of benefits in the context of an ESG framework," it concludes.


Recently, Tuur Demeester's analysis firm Adamant Research published a new report with the little-veiled title "How to position for the Bitcoin boom. In the report, the company argues why bitcoin is going to rise significantly and how to reflect that assumption in a portfolio. Yesterday, Tuur was a guest on Cryptocast to explain this.

Behind the scenes

Business investing in crypto

This week we'd like to explain our business crypto account. Do you have a personal holding company, foundation or another form of business? At Amdax, you can open a business account, which allows you to invest in crypto assets with a business account number with tax advantages. All our private services are also available for business purposes. So you can trade and store crypto assets yourself, but it is also possible to have your business assets managed by our asset managers.

Are you interested? Read more about our business crypto account or apply for a business account via My Amdax.

New at Amdax: Quant ($QNT)

It has recently become possible to hold and trade Quant ($QNT) through Amdax. Quant can be purchased and traded in EUR. It is also possible to purchase Quant periodically through the crypto savings plan.

Peter Slagter Schrijver, spreker en analist Bitcoin Alpha, Descryptor en Satoshi Radio

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