In the past few months, Ripple has made numerous announcements about its business pivots, including entering the stablecoin market.
One of the latest updates came this week, with Ripple revealing plans to make the XRP blockchain more DeFi-friendly by introducing smart contracts to the XRP Ledger (XRPL).
However, the price of XRP during these crucial announcement periods has been relatively stable. It has remained largely within the same range, around $0.5.
Numerous community members have noted this trend, but attorney Bill Morgan has added a new twist to the observation.
XRP Price Not Reflecting Ripple’s Effort
Morgan pointed out that these major milestones from Ripple have not led to noticeable changes in XRP’s price. In parallel, he questioned Ripple’s influence on the asset’s value, particularly whether XRP holders can have a “reasonable expectation of profits” based on Ripple’s efforts under the Howey test, which determines if an asset qualifies as a security.
Notably, Morgan’s remarks touch on a key aspect of Ripple’s legal battle with the SEC. The regulator had argued that XRP is a security based on one of the prongs of the Howey test, which focuses on the expectation of profit from the efforts of others.
This is central to the SEC’s case, especially when considering Ripple’s past sales of XRP and its distribution to institutions. However, Morgan questions whether such an expectation of profit is even rational after years of XRP price fluctuations that appear disconnected from Ripple’s direct actions.
“I would question whether such an expectation is rational,” he noted.
XRP Price Follows Broader Market Sentiment
In a follow-up comment to his post, Morgan expanded on his view. He stressed the decentralized nature of the XRPL and the broad, global ecosystem supporting XRP.
Specifically, he argued that XRP’s long-term price movements are driven by numerous factors beyond Ripple’s control, with the asset’s value largely following broader market sentiment.
This decentralization challenges the SEC’s attempt to argue that XRP investors rely on Ripple’s efforts for profit, a key point in their legal case.
Notably, Ripple successfully defended against the SEC’s argument during the legal proceedings. The court granted victory to Ripple and XRP when it ruled that XRP itself is not a security, although certain contracts related to its sale could be.
“It’s no surprise the SEC’s expert on the ‘efforts of others’ factor in the Howey test, who never spoke to an XRP holder, blew up in its face. It was pure unreality,” Morgan concluded.
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