Crypto Riches for Investors - Part 4
Abraham George Crypto Musings
Read Part 1, Part 2 and Part 3 if you haven’t already.
Over the last two years, I have been writing about Ripple/XRP, XLM, CBDC, and Blockchain. For your convenience, I will list the links at the bottom. I stand by everything written in those articles. However, in one of them, I had given a price target for XRP which did not materialize. That did not deter me from investing more into it.
What we need to compare and contrast is the difference between price and value. Price can remain either suppressed or inflated for a long time. Always remember that price is an advertising agent. Since our psychology is wired towards profit or loss, price is always a concern for us. Many a time, we pay high for an instrument and then prices come down a bit. There must have been some external factors that you didn’t take into account or you probably didn’t know about. But if you have done your homework and analysis about the instrument in the first place, that should not stop you from staying invested or adding more to your investments. Everything depends upon your understanding, conviction, and financial position. The most important thing to take into consideration is not to be leveraged and not invest any amount that will affect your existing lifestyle. Cryptos are the most volatile asset class and very new too. You wouldn’t want to be invested in more than 5% of your total wealth. But this investment can sometimes give you more returns than your other 95%. That is the asymmetrical opportunity you have here. Remember that we are looking for long-term investments and try to position ourselves early. I will show you ways to stake your holdings to gain passive returns as the asset value rises as well.
I started investing in XRP in Oct 2020, a few months before the SEC sued Ripple. Very soon my investment went underwater, but I stayed on and tried to understand what was the case all about. The more I understood the case, the more I became convinced that Ripple is not in the wrong and they probably stood a chance to win against the SEC.
That is exactly what is going to happen. All along in this case, the SEC has been exposed. Their bullying tactics and regulation by enforcement have been outed to the Congress and to the general public. This is a monumental case when settled should give clarity to the crypto industry. At every stage of the case, the SEC has been a loser. The more they tried to defend themselves or attack Ripple, the deeper the pit they dug to bury themselves. So far the only thing that they have succeeded in is in buying more time with the Department of Justice.
But this will not go on for long. There will be a settlement or summary judgment and I don’t see Ripple losing this case at all. Ripple has assembled a posse of 21 eminent lawyers to fight this case probably costing Ripple almost 50 mln dollars by now (I am assuming a cost of $2 mln per month). Then there is John Deaton of CryptoLaw who was granted Amicus Curiae (an independent lawyer to represent investor grievances) status by the main presiding Judge Torres. Deaton has done an impeccable job in educating the public and exposing the SEC. When I first wrote about Deaton, he had a following of 19,000 investors to take a class action case against SEC; now that has ballooned to more than 67,000.
Judge Analisa Torres and Judge Sarah Netburn are the main judges handling this case and everything that has happened so far should work in favour of Ripple. In many ways, they have exposed the hypocrisy and high-handedness of the SEC. It is only Congress that has jurisdiction over the SEC and many of the senators are watching the progress of this case and even making public comments. Senator Tom Emmer and Tom Cotton have been very critical of the SEC, particularly Chairman Gary Gensler.
The way former SEC Chairman Jay Clayton slammed a case against Ripple on his last day in office and then went to work for a crypto hedge fund named “One River” and how the SEC director of corporate finance William Hinman gave a free pass speech to Ethereum stating that Ethereum is not a security and profiting more than $15 mln from a law firm called Simpson Thacher who was directly involved in the promotion of Ethereum has all become questionable.
Hinman went ahead with his involvement with Simpson Thacher despite the SEC ethics committee demanding him to not have any involvement with them as he had a conflict of interest as long as he worked for the SEC. Hinman and the SEC under oath have contradicted their statements to the court and they are in a pickle. Now when the court is asking for all the 68 emails pertaining to the discussions that happened within the SEC, they are refusing to provide them claiming attorney-client privilege.
I can go on and on about this case but that is not what is important. If the case goes into summary judgment and the SEC loses the case, they can lose all jurisdiction over cryptos. Then the power of regulation can be shifted to CFTC or to a newly created regulatory body for the digital space. The Congress will decide that and considering there is a mid-term election in November and there is every chance that the Democrats could lose their majority, we are not sure if we will get clarity on this before that.
Let me come back to XRP. With the suing of the SEC, prices in XRP dropped as low as $0.17 but I was not convinced about Ripple not doing anything wrong and therefore did not invest more. Prices went as high as $2 later on and I did invest more as it moved up. Now prices are much lower and there is a chance they can go much lower not because anything is wrong with XRP but because of the general market conditions and the crypto winter that we are going through. After the Terra and Luna fiasco, the stable coin Tether is under severe pressure. If the authorities don’t pre-empt this there is a very good chance that Tether could also collapse forcing all cryptos to go down, especially Bitcoin. A move down to $8000 or $11,000 for Bitcoin in such a situation should not be shocking or surprising.
I feel such a move should provide great buying opportunities in the altcoins that I am targeting. More on the type of cryptos you should be targeting and what makes cryptos more valuable soon. Refer to my previous articles below. Stay tuned!
Crypto regulations are coming soon
Cryptos are fighting their way up
Bitcoin, Incredible Hulk and Governments
Stellar XLM should give Ripple XRP a run for its money
CPaaS, Twilio, Blockchain and Tanla - Part 3
From Gutenberg to Blockchain - Parts 1, 2, 3, 4
Digital theme has a long way to go
Central Bank Digital Currencies - Parts 1, 2, 3
Central Bank Digital Currencies will usher in a new world
Will CBDCs be the next transformative innovation?
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Abraham George is a seasoned investment manager with more than 40 years of experience in trading & investment and multi-billion dollar portfolio management spanning diverse environments like banks (HSBC, ADCB), sovereign wealth fund (ADIA), a royal family office and a hedge fund. Currently, he is a co-founder of a new hedge fund where foreign citizens can invest in Indian growth stocks like Tanla operating in hyper-growth markets like CPaaS.