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Is Ripple a Good Investment Target?

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“It’s basically like a Bitcoin but for like banks or something right?”

The above statement is generally the extent of how much many cryptocurrency investors know about Ripple. For having the third highest market cap, many people still know surprisingly little about Ripple XRP or the potentially industry-shaking business that is Ripple.

If you find yourself in this category, don’t fret. You’re not alone, nor is understanding what Ripple does too far out of reach.

When it comes to exciting cryptocurrencies, the average investor is usually drawn to volatility. A sudden atmospheric surge in price for a random altcoin usually makes headlines, regardless of how viable an investment target that coin is.

Whereas some coins such as Monero and NEO multiplied in price, Ripple stayed relatively quiet. It still held onto being in the top 5 most popular coins, but it was just not exciting to watch. This led a lot of people to forget, or otherwise neglect to understand, what Ripple is trying to accomplish.

The opportunity Ripple is trying to seize is based on the inefficiency of the current global payment industry. The world sends roughly $155 trillion across borders, and this $155,000,000,000,000 (that’s a lot of zeros) is chipped away at with high fees and lengthy processing times. If you’ve seen a chunk of your payment from an international client go missing to fees, multiply that to an almost incomprehensible amount of money.

October Growth

The recent and unexpected spike in price signaled a bull-run in a time where altcoins were generally down double-digit percentages.

The reason XRP saw some growth in October is largely due to the belief that Ripple is going to make a big announcement at their upcoming conference in Toronto called “Swell”. Traders are buying into XRP with the hope that the price will continue to grow after the conference. If anything, this should be a red flag. Anticipation has already been built into the current price, and if the conference is underwhelming, we’ll likely see a drop in price.

Other than the conference, Ripple has been expanding into Asia by opening offices in India and Singapore. Additionally, Ripple announced that RippleNet (their enterprise blockchain network) added its 100th member.

Is Ripple a Good Investment Target?

And so we arrive at the point that any keen investor has been asking themselves since the beginning of the article.

It’s important to emphasize that I am only providing you with information to help your decision and not financial advice.

In a recent AMA on Quora Sessions, the CEO of Ripple, Brad Garlinghouse, touched on why one should invest in Ripple:

“First a clarification on the question: Ripple is a private, cash flow positive company and we don’t have any plans to raise additional capital

As a general rule I try not to give investment advice, but I’m happy to give a summary of what drives Ripple’s and XRP’s value. Ripple is focused on enabling a global network of financial institutions to use our software to create what we call the the Internet of Value. Our goal is to lower the marginal cost of international payments to the point where money can move as easily as information does today.

As the network grows and adoption of Ripple’s products increases, the value of Ripple should grow as well.

As this occurs, the demand for XRP will increase and markets will reflect that.”

That being said, while Ripple is attempting to tackle an enormous problem and is perhaps the best-suited company to do so, there are some major drawbacks (in my humble opinion) investing in it for the long-term.

The Cons

  1. Ripple (XRP) is not decentralized. Ripple, the holding company, owns about 61% or $16 billion worth of all the XRP. This means that they can release their XRP to have some control on prices. Since they have an enormous holding supply, this would only make the price go down unless they choose to buy XRP tokens back, which they haven’t shown any intentions to do.
  2. Ripple is all about low payment fees. That’s their edge over the current global payment system. It’s not in their best interest for XRP tokens to be worth a lot since that would increase the cost per transaction. Bad news if you’re looking for massive gains.
  3. There are 38,600,451,446 XRP in circulation, with a market cap of $9,983,659,362. There is also currently a maximum supply set of 100,000,000,000 XRP. The sheer supply curbs the growth potential. We’re likely not going to see a single XRP token follow a similar growth pattern of a NEO token (currently trading at $29.51).

The Pros:

  1. Ripple is one of the few companies in the cryptocurrency world that is making money and is working with actual clients. It’s pretty much an anomaly in a market full of tokens with only a whitepaper to their name.
  2. The global payments industry is worth trillions.
  3. The reason many big banks will have a lot of difficulty making their own Ripple spin-off is because they’re inherently self-serving and centralized. For example, Banko Alex has no incentive to adopt the primary usage of a Banko Moskov coin. These banks are stuck in a conundrum in having to create a decentralized coin while still maintaining control. Ripple serves as an objective third party intermediary that has only one primary objective: to facilitate global payments and earn revenue in doing so.

Final Thoughts

For me, Ripple has always been an interesting coin to watch. My interest is largely fueled by a frustration with the archaic global payments industry, and that aligns me with Ripple’s opportunity.

A few questions you should be able to answer prior to investing in any cryptocurrency include:

  • What problems are they solving?
  • Are they building something useful?
  • What is their industry like (size, competitors, etc)?
  • Do they have a competitive edge?
  • What’s their founding team’s experience?
  • How many tokens are released, or plan to release in the future?

If you’re interested in Ripple, I highly recommend following their three-day conference Swell. Two of their keynote speakers include Ben Bernanke, the former chairman of the U.S. Federal Reserve System, and Tim Berners-Lee, inventor of the World Wide Web. There’s a reason so many people are awaiting the conference with anticipation, and it’s largely to hear what these two speakers think about the current state of Ripple and the blockchain world.

I also recommend checking out how Brad Garlinghouse (CEO of Ripple) answered a variety of questions pertaining to Ripple as a company and its growth potential. The full series can be found here.

As far as investing, that decision is up to you. Either way, Ripple will be an interesting story to follow.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 18 rated postsAlex Moskov is a writer and entrepreneur with a passion for building and creating awesome things. Alex has experience in music tech startups, digital marketing, and cryptocurrency investing.




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  1. steven5210

    October 13, 2017 at 6:20 pm

    The recent ICO ChainLink is a pretty big competitor to Ripple. I would suggest looking into them. ChainLink won the Innotribe Industry Challenge 2016 and are working with SWIFT to produce a Proof of Concept (PoC) that will be demonstrated live at SIBOS (SWIFT’s annual conference) which starts next week on the 16th. I am invested in both but will probably invest more into LINK.

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Cryptocurrencies

No, It’s Not Just You. Crypto Funds are Also Seeing Red

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Crypto Fund Losses

While your cryptocurrency holdings may be severely underwater, at least you do not have to publicly disclose it.

It is coming to that time of year that all of the cryptocurrency funds have to report the quarterly numbers, and they are not looking pretty. They are all coming to grips with the impact of previous record quarters and the subsequent falls.

I’m going to take a look into some of these funds and what the falls in their portfolios means for the broader crypto fund ecosystem.

Quarterly Reckoning

While many of the crypto funds are private and will try and keep their returns out of the public eye, we have insight into two very prominent funds in the space.

These are Galaxy Digital and Pantera capital.

Galaxy Digital

For those who do not know, Galaxy digital is run by Wall Street veteran Mike Novogratz. He is a celebrity in the cryptocurrency ecosystem who has brought a great deal of interest from Wall Street into crypto.

Unfortunately, Galaxy Digital has had a rough last few quarters.

Given that the company is listed on the TSX Venture Exchange (TSXV), they are required to release these quarterly results. On the 29th of November they released their 3rd quarter results as well as the results for the 9 months ended 30th September 2018.

Galaxy lost $76 million in the third quarter of the year which made up the the bulk of the $175m loss that occurred over the first nine months of the year. This is also pretty unfortunate given that Mike called a bottom in the crypto market in the middle of September.

While the call came just before a short uplift in the price, it fell right back down again. After the disclosure of the numbers, Galaxy digital’s share price fell by over 10% and the TSX had to suspend trading.

Unfortunately, these numbers will not have captured the losses that have most likely occurred over the past month in November. Short of a miracle rally in the next few weeks, the fourth quarter and indeed the whole year are likely to be much more bleak.

Mike Novogratz was pretty open about the challenges that Crypto funds had been facing throughout the year. In an interview that he held with the Financial times in late November he said:

[But] this year has been challenging. It sucks to build a business in a bear market

All of us believers can agree Mike, it really does suck!

Pantera Capital

Unlike Galaxy digital, Pantera is not a listed company. This means that they do not have to publicly disclose their earnings to the broader market.

However, according to a letter to its clients, the billion dollar fund has also had a tough year.

pantera fund losses
Disclosed Losses in Pantera Presentation. Source: Twitter

As you can see, the fund reported a 72.7% loss in the year till the end of August. They even reported a 40.8% loss in the fund since December 2017 (prior to bull run). These numbers are only up until August so like the above example with Galaxy, they have not captured the recent sell off that we have witnessed.

Despite this though, Dan Morehead (Pantera’s founder), is still long term bullish on the price of Bitcoin. In an interview with Bloomberg he said that

Six or eight years ago there was probably a million people on earth using it, now there are 50 million people that use it… I think in a decade it’s going to be billions of people using it…

As long as Pantera’s investors are as convinced in the long term trajectory of Bitcoin and cryptocurrency, Dan can stick it out for the long term.

It’s not Just the Funds

While the cryptocurrency funds are the most present example of businesses that are feeling the heat from the crypto crash, they are most certainly not the only example.

Cryptocurrency miners are another business that is heavily exposed to prices. They don’t only sell an asset that is falling in value but they have to meet monthly expenses such as electricity (not to mention return on capital equipment).

There have been rumors for some time now that Bitmain, the largest mining operation, is having trouble with their upcoming IPO. For example, there were concerns with the IPO given the amount of Bitcoin cash they had on their books.

Moreover, the SCMP reports that Bitmain and other mining equipment manufacturers are likely to suffer collateral damage as a result of a potential trade war between the USA and China.

Then you also have the impact that the fall in cryptocurrency trading activity is likely to have on the exchanges.

While exchanges are not public and are unlikely to report their earnings, you can get a pretty good idea of how well they are doing by their traffic stats as well as their public 24 hour volumes.

Coinbase alexa ranking fall
Fall in rankings of Coinbase.com on Alexa. Source: Alexa

As you can see from the above image, there has been a fall in the Alexa rank of coinbase.com continuously since the beginning of the year. The Alexa ranking is one of the most accurate metrics of how a site stacks up in terms of their rankings.

Bittrex Volume fall
Drop in Bittrex Trading Volume. Source: Coinmarketcap

Taking a look at the above image, we have the 24 hour volume of the Bittrex exchange from the 2nd of January on the left and the 9th of December on the right. As you can see, the volume over the past 24 hours now is a mere 1% of the volume that it had at the height of the bull market.

Exchanges make money on fees. Lower volume => Lower fees => No Christmas Bonuses.

Where to Now?

While these numbers are indeed quite depressing, how things are likely to progress really depends on what view the company or fund takes.

Much like how you view your own crypto portfolio, these CEOs and managers are likely to take a cold hard look at their operations, assets and long term vision. Do they fall for the FUD and leave the game or do they adapt and become more nimble / selective?

Some big players have chosen the latter. For example, Joe Lubin (co-founder of Ethereum) sent a letter to his Consensys employees around how the company will adapt to the new market conditions.

In terms of the funds that we have examined above, they are likely to stick it out. Mike Novogratz and Dan Moorhead are adherents to the power of blockchain technology and cryptocurrencies. They seem to be in it for the long game and have strong investors behind them.

For further green shoots of a potential recovery, you need look no further than where other institutional investors are entering the market. Money managers, high frequency trading firms and investment banks are taking the leap into the digital asset world.

So, while you are not alone in your large crypto losses, you are also not alone in your beliefs of a brighter crypto future.

Featured Image via Fotolia

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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5 stars on average, based on 8 rated postsNic is an ex Investment Banker and current crypto enthusiast. When he is not sitting behind six screens trading Bitcoin, he is maintaining his numerous mining rigs.




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Analysis

Crypto Update: Weekend Bounce Fails to Turn Bearish Tide

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The major cryptocurrencies continue to be stuck in declining trends, despite the bounce that followed the latest technical breakdown in the segment. The top coins failed to recover above the prior bear market lows sustainably, and today, the market turned lower again, with the weakest currencies already threatening with new lows.

The long-term picture remains overwhelmingly bearish, and out trend model is negative across the board, with only Bitcoin showing relative stability, still holding up near its prior low. There is no sign of bullish momentum among the majors and traders and investors should remain defensive here, until at least a short-term trend change, as despite the negative sentiment and the deeply oversold broader picture, odds still favor new bear market lows in the coming period.

BTC/USD, 4-Hour Chart Analysis

Bitcoin bounced back after last week’s breakdown and tested the $3600 level before turning lower again. Since the coin failed at the key level, the short-term sell signal in our trend model remains in place, together with the clear long-term sell signal.

A move towards the long-term support zone near $3000 remains likely, and traders still shouldn’t enter new positions here. The coin is well below the key $4000-$4050 zone, and the short-term downtrend is still intact, despite the recent rally attempts.

ETH/USD, 4-Hour Chart Analysis

Ethereum is also stuck below the prior bear market low and the key 95-$100 support zone, similarly to Bitcoin, and although the coin is not showing clear relative weakness anymore, it is still bearish on both time-frames in our trend model, with the steep downtrend being intact.

New lows are still likely in the coming weeks, and traders and investors should stay away from the coin Strong resistance above the primary zone is ahead near $120, $130, and $150, while long-term support is found in the $73-$75 zone.

Bearish Leaders Remain Weak

XRP/USDT, 4-Hour Chart Analysis

Ripple continues to be relatively weak from a short-term perspective and the coin is hovering near the $0.30 following the failed rally attempts, which were capped by the $0.32 resistance level. The coin is on sell signals on both time-frames due to the recent weakness and technical breakdown, and a test of the bear market low near $0.26 now seems likely. Primary support is now found at $0.28, with further resistance levels ahead at $0.3550 and $0.3750.

Litecoin/USD, 4-Hour Chart Analysis

Litecoin is also showing relative weakness, despite its brief period of strength in November and the coin is trading just above the next major support zone which is found near the $23 price level. The steep long-term downtrend is clearly intact and our trend model bearish both time-frames, and new lows are likely in the coming days, with strong resistance ahead near $26 and between $30 and $30.50.

Monero/USDT, 4-Hour Chart Analysis

On another negative note, the bearish leaders are still not showing signs of stability, barely bouncing off their lows during the broad rally attempt. Monero is still among the weakest majors, and the coin looks ready for another leg lower, with last week’s breakdown clearly being intact.

We expect the downtrend to continue in XMR and the other relatively weak coin, and traders shouldn’t enter even new positions here, despite the oversold long-term momentum readings in the segment.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 412 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Crypto Markets Turn Red Following Sunday Bounce; Bitmain Closes Israeli Operation

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Cryptocurrency prices were back on the defensive Monday, with bitcoin and the major altcoins falling between 3% and 7% through the midday session. The latest bout of turbulence followed a modest relief rally on Sunday that once again proved to be short lived.

Market Update

The combined value of all coins in circulation reached a session low of $110.5 billion, according to CoinMarketCap. Losses were broad-based, with bitcoin falling 3.8% to $3,511. The leading digital currency has been consolidating incrementally lower over the past two weeks, with each subsequent high weaker than the last.

Among the majors, Ethereum, Stellar, bitcoin cash and Litecoin each fell more than 6%. In the process, Litecoin has fallen all the way down to no. 9 in the market cap rankings with a total value of $1.5 billion. It’s the last coin to have a billion-dollar market cap. Tron, which is ranked tenth following a daily loss of 4%, is valued at $878 million.

With the exception of stablecoins, nearly every cryptocurrency in the top-100 was down on Monday. DEX was a notable exception, with the coin extending its Sunday bounce with another 37% gain. DEX has jumped 23 spots in the market cap rankings over the pas 24 hours. A full recap of Sunday’s top performers can be found here.

The market as a whole has seen its market capitalization fall by half over the past month, culminating in a new 15-month low of $103.5 billion on Friday. From a peak near $840 billion in January, the market has shed a staggering 86% throughout the course of 2018.

Bitcoin Mining Suffers

As Hacked previously reported, the protracted bear market in cryptocurrencies has impacted not just investors, but businesses with direct and indirect exposure to digital assets. In terms of direct impact, very few segments of the ecosystem have been hit harder than bitcoin miners, which are currently operating at a significant loss. Hundreds of thousands of mining rigs have reportedly shut down amid the recent downturn.

Bitmain, the world’s largest blockchain conglomerate, has announced it is shutting down its Israeli operation following the recent meltdown. According to Globes, an Israeli publication, the China-based company has laid off all 23 employees.

“The crypto market has undergone a shakeup in the past few months, which has forced Bitmain to examine its various activities around the globe and refocus its business in accordance with the current situation,” Gadi Glikberg, VP of local operations, told employees.

Just five months ago, the China-based company was looking to triple the size of its Israeli offices. Over that period, roughly $200 billion has been wiped from the cryptocurrency market cap. Bitcoin alone has accounted for about $80 billion of that loss.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 692 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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