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Last month Ripple was sued by the SEC, here's how we reacted

Updated: Aug 5, 2024
Published: Jan 16, 2021
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We get this often:

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"Did you give up on XRP? You supported it for so long and talked about it extensively."

So grab a coffee, settle down and lets get into it.

As most of you know, we've viewed XRP as a coin that could deliver an outstanding return ($5-$7). When price rallied in November, we of course were reaping the rewards and happy with the advance.

December came and things changed...

The SEC lawsuit came and it wasn't something that could be ignored. Yes, a settlement could be reached, or better yet XRP gets announced as a non-security. But exchanges had to take action, that action was delistings. The latter was the bigger risk.

One of the main aspects that made XRP so attractive was that retail loved it. They immediately saw it, 3rd largest by market capitalisation, listed everywhere and "cheap".

Without it being listed on most exchanges, this made its bullish case difficult to materialise. The other aspect is the lawsuit left a bad taste in investors' mouths which made the volume that could come in less significant.

We were torn at first, on the one hand an asset we viewed as really attractive for so long and the other hand we had these changes to take into consideration. We are firm believers in "Adapt or die" in financial markets. This was no different. Here is what we did:

1. The downside risk of owning XRP

This had now increased and the upside probability had decreased. As an investor you think in R:R not in emotional attachment.

2. Opportunity Cost

While waiting with our XRP bag in our hand, what outsized returns would we be missing from stubbornness?

A new sector was emerging in crypto: Decentralised Finance (DeFi). It was becoming Wall Street on-chain without the corruption. We thought "What would it cost us if we wait with our XRP bag instead of parking our capital in this sector?".

As investors, we have two goals and two goals only:

- Capital Protection - Capital Appreciation

The first being more important than the second. XRP's downside risk was increasing and DeFi's upside potential was simply too magnificent to miss out on. We decided to reduce our XRP exposure and rotate capital into DeFi.

The result?

XRP's price fell more, we saved our capital from further depreciation.

The DeFi tokens we invested in absolutely boomed (20x is one of them). We're talking HUNDREDS% of percents in a few short weeks. The strategic decision we took saved us a lot of money and made us a heck of a lot of profit. Never forget what your goal as an investor is:

MAKING MONEY

Do we own any XRP? Yes, we still do own some. The position reduction is because of the risk increase and opportunity cost. Our XRP allocation that's left is a bet that Ripple would be able to navigate the rough waters. Our bet is not as big though, our big bet is DeFi. A sector that most are unaware of.

If you are still unsure on how to react to the news, then check out the coins we have in our portfolio.

 

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