Aaryamann Shrivastava
FXStreet
- XLM price is presently trading at $0.155 after hitting the intra-day highs of $0.167.
- The Sharpe Ratio at a three-month high suggests that risk-adjusted returns are high for XLM holders.
- However, skepticism still runs in their system as the overall sentiment is still negative in the Stellar community, improving slowly but consistently.
XLM price is still leading the crypto market with its gains days after the initial result of the Securities and Exchange Commission (SEC) vs. Ripple lawsuit. While the development had a bullish impact on the entire crypto market, there are two reasons why Stellar Lumens, of all the cryptocurrencies, is noting gains more than others.
XLM price continues to rise
XLM price has seen another 20% rise over the past 24 hours, bringing the trading price to $0.155 at the time of writing. The rally helped in recovering the corrections the altcoin faced over the past week.
XLM/USD 1-day chart
XLM price continues to post double-digit gains almost seven days after the initial outcome of the SEC vs. Ripple lawsuit. One of the reasons is that they are both the biggest payment processors in the crypto market. And secondly, Stellar Lumens was founded by Ripple's co-founder, Jed McCaleb, who also co-founded the infamous Mt. Gox crypto exchange.
Hence, XLM price is still rising, with its Sharpe Ratio hitting a three-month high this week.
Sharpe Ratio represents the risk premium of an investment versus a safe asset such as Bitcoin. This risk premium currently stands at 4.55 at the moment for Stellar Lumens, which is a certain confidence booster for the XLM community.
XLM Sharpe Ratio
This is visible in their overall sentiment as well, which has improved significantly over the past month. Although there is still some skepticism in their system due to the recent correction, by and large, the XLM community is rising out of its bearishness.
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XLM weighted sentiment
This could prove to be an advantage for XLM price going forward as not only can it help in the increase in the value of the asset but also prevent any severe correction as the altcoin recently observed.
SEC vs Ripple lawsuit FAQs
Is XRP a security?
It depends on the transaction, according to a court ruling released on July 14:
For institutional investors or over-the-counter sales, XRP is a security.
For retail investors who bought the token via programmatic sales on exchanges, on-demand liquidity services and other platforms, XRP is not a security.
How does the ruling affect Ripple in its legal battle against the SEC?
The United States Securities & Exchange Commission (SEC) accused Ripple and its executives of raising more than $1.3 billion through an unregistered asset offering of the XRP token.
While the judge ruled that programmatic sales aren’t considered securities, sales of XRP tokens to institutional investors are indeed investment contracts. In this last case, Ripple did breach the US securities law and will need to keep litigating over the around $729 million it received under written contracts.
What are the implications of the ruling for the overall crypto industry?
The ruling offers a partial win for both Ripple and the SEC, depending on what one looks at.
Ripple gets a big win over the fact that programmatic sales aren’t considered securities, and this could bode well for the broader crypto sector as most of the assets eyed by the SEC’s crackdown are handled by decentralized entities that sold their tokens mostly to retail investors via exchange platforms, experts say.
Still, the ruling doesn’t help much to answer the key question of what makes a digital asset a security, so it isn’t clear yet if this lawsuit will set precedent for other open cases that affect dozens of digital assets. Topics such as which is the right degree of decentralization to avoid the “security” label or where to draw the line between institutional and programmatic sales are likely to persist.
Is the SEC stance toward crypto assets likely to change after the ruling?
The SEC has stepped up its enforcement actions toward the blockchain and digital assets industry, filing charges against platforms such as Coinbase or Binance for allegedly violating the US Securities law. The SEC claims that the majority of crypto assets are securities and thus subject to strict regulation.
While defendants can use parts of Ripple’s ruling in their favor, the SEC can also find reasons in it to keep its current strategy of regulation by enforcement.
Can the court ruling be overturned?
The court decision is a partial summary judgment. The ruling can be appealed once a final judgment is issued or if the judge allows it before then. The case is in a pretrial phase, in which both Ripple and the SEC still have the chance to settle.
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