Ripple CTO: It’s Time to ‘Seriously Consider’ Selling Some Crypto

In brief

  • Ripple Labs CTO David Schwartz says those with life-changing amounts of crypto should think about selling some.
  • Ripple is fighting a $1.3 billion SEC lawsuit over whether its XRP token is a security.

Ripple Labs CTO David Schwartz is giving some reasonably sound investment advice, though it comes at a strange time for the payments network.

“If you have life-changing amounts of cryptocurrency, please take some time to seriously consider selling some to reduce your risk and exposure,” tweeted Schwartz, before adding: “This is not any kind of prediction about what the market will do.”

He went on to say that holders should reevaluate if they have at least half a year’s earnings in crypto and/or “significant debt.” Given the hot state of the crypto market—Ripple has risen 850% in the last year and Bitcoin is up 790% to $63,000—that’s probably most long-term holders.

Schwartz has taken his own advice in the past. He admitted in 2019 to having sold $40,000 worth of Ethereum before the peak of the late-2017 bull run to buy solar panels. In the latest thread, he suggested that he shouldn’t have sold all of it. “I guess I was thinking it would go back down and I’d buy back in,” he tweeted. “But it didn’t. You can regret taking too little risk too, of course.”

When taken alone, Schwartz’s tweets are hardly controversial. When your risky investment into a relatively volatile asset pays off, best to convert some of the profit into something more stable. That’s why retirement mutual funds rebalance every year to increase the percentage of bonds relative to stocks. It locks in earnings.

But the tweets come during the middle of a $1.3 billion SEC lawsuit against Ripple Labs over what the agency views as unregistered securities sales of the payment network’s XRP token. That case hinges on whether XRP is, in fact, an investment contract or merely a virtual currency. (The latter is how the SEC views Bitcoin and Ethereum; Ripple is hoping to be treated the same way.)

Ripple just yesterday filed a motion to dismiss the SEC’s suit after the tech firm won three fairly significant decisions. First, the SEC will have to share some documents detailing its discussions of Ripple, Bitcoin, and Ethereum. Second, Ripple can redact some of its executives’ private email exchanges, thereby limiting what the SEC can use as ammo. And last, the SEC’s request for executives’ personal financial data was denied.

But the case isn’t over yet. Usually, company executives try to maintain a low profile during legal proceedings, lest their words become evidence.

Then again, Schwartz was referring generally to cryptocurrencies, not XRP. And he implied that crypto prices can—and do—go down. Not XRP, though. It’s going up, hitting its highest price this year at $1.81. 

Is anyone selling?


The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.


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Coinbase Awards All Employees 100 Shares in Surprise Giveaway

In brief

  • The surprise giveaway was a “thank you” according to Coinbase
  • Only Coinbase’s 1700 full-time employees are eligible

When Coinbase goes public on Wednesday, the list of people eligible to cash in will be longer than expected. That’s thanks to a recent decision by the company to hand out 100 shares to its approximately 1700 employees around the world.

The giveaway means that every full-time employee at the company is poised to become $25,000 richer based on a $250 reference price set by the NASDAQ stock exchange on Tuesday. The actual price at which the stock begins to trade, however, could be significantly higher—or lower.

The surprise gift was actually announced during a Coinbase all-hands meeting on March 25 . The Irish publication Business Post first reported the 100 share distribution upon learning of it from employees at Coinbase’s Dublin office. A Coinbase spokesperson confirmed the giveaway to Decrypt today, describing it as a “thank you” to the company’s staff.

In recent years, Coinbase has replaced equity grants to new employees with so-called Restricted Stock Units (RSUs) that permit recipients to acquire shares over time. By contrast, the March 25 distribution amounts to a no-strings-attached grant.

Like other tech and fintech companies, Coinbase relies on contractors to perform many lower-level jobs, so people who provide the company with tasks like cafeteria and janitorial services will not receive any of the largesse.

Meanwhile, former and current senior executives at the company are already awash in Coinbase shares. These include CEO Brian Armstrong, but also Coinbase’s head of product and chief legal officer, who are sitting on hundreds of thousands or millions of shares, according to regulatory filings.

Coinbase is making its shares available to the public via a direct listing, which differs from a traditional initial public offering in that the company in question does not rely on underwriters, and does not issue a new batch of shares. Coinbase stock is expected to begin trading Wednesday morning San Francisco time, where the company is headquartered. The listing marks a major milestone for the crypto industry as a whole, and is expected to inform the price of other crypto companies and have broader implications for Bitcoin.


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Bitcoin Charging to $120,000, Says Veteran Trader Tone Vays – Here’s When

Veteran trader and crypto analyst Tone Vays says that Bitcoin (BTC) is headed towards $120,000 and reveals when he thinks the flagship cryptocurrency can get there.

In a new video, Vays tells his 105,000 YouTube subscribers why he thinks Bitcoin is close to hitting his bullish near-term price target of around $80,000.

“Bitcoin is currently at a brand new weekly all-time high. This is absolutely incredible. We have not broken the all-time high yet on a swing top that was $61,769 and the swing top last night was $61,200, but the close is so important. It is so incredibly important. I know it’s a 24/7 market, but I’m a traditional TA (technical analysis) guy and to me, it is all about the close and the weekly close being at a new all-time high makes me really, really bullish. I believe we are going to come close to hitting this target.

I know my target is in the low $80,000 range… I would be happy exiting my trades in the mid $70,000 range and the slower we get there, the more bullish I’ll remain. The faster we get there, the more I’ll be looking for a crash.”

While Vays is short-term bullish on Bitcoin, he expects a major pullback before the world’s leading crypto asset can do a giant leap. 

“I am now looking for six more weeks of upside. Can we get to $120,000? Can we double in price over the next six weeks? Yes. Am I anticipating a doubling of the price over the next six weeks? I’m going to say no…

I think sometime in the next four to five weeks, we will reach a top and begin a more critical pullback.”

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Record $8B open interest on Ethereum futures shows the pros are ‘here’

The price of Ether continues to push higher, and many analysts are calling for $3,000 as a short-term target. All of this “success” takes place in the face of Ether (ETH) being in a bottleneck regarding high fees, network congestion and a tense situation with miners. 

With decentralized finance (DeFi) applications taking center stage and the aggregate volumes at exchanges surpassing $4 billion per day, Ether’s price has rallied over 200% since the start of the year, marking a new all-time high at $2,300 on April 13.

This impressive price surge caused Ether’s open interest to reach a record high of $8 billion. The figure represents 50% of Bitcoin’s (BTC) markets just two months ago.

Some investors might say that derivatives contracts pose a risk for larger corrections due to liquidations, but one must remember that the same instrument can be used for hedging and arbitrage.

Ether futures aggregate open interest. Source: Bybt

Not every short seller is aiming for lower prices

While the typical retail trader relies on perpetual futures (inverse swaps) primarily for short-term leverage positions, market makers and professional traders will tend to seek yields.

This is usually achieved via “cash and carry” strategies that combine options trades. Therefore, to understand whether the current open interest represents a risk or an opportunity, investors must look at other indicators such as the funding rate.

Massive liquidations typically occur when buyers (longs) are excessively optimistic. Hence, a 7% intraday correction forcefully terminates everyone using 15x or higher leverage. Despite making headlines, $1 billion orders would represent a mere 6% of the current average volume.

Ether futures aggregate volume. Source: Coinalyze

As shown above, Ether futures aggregate volumes will climb above $25 billion when additional volatility occurs. This data means the eventual liquidation impact might be even more negligible.

The impact of futures goes in both direction

Analysts tend to ignore a futures contracts’ buy-side impact, especially during a bull run. No one blames derivatives for a sudden 7% price increase, although that might have accelerated the movement. This theory holds especially true considering the steep funding rate charged for longs. Traders should avoid these moments unless they’re confident that the rally will continue.

Ether perpetual futures 8-hour funding rate. Source: Coinalyze

Whenever longs are the ones demanding more leverage, the funding rate will become positive. A 0.15% fee every eight hours equals 3.2% per week. Therefore, arbitrage desks and whales will buy Ether at regular exchanges and simultaneously short the futures to collect the funding rate. This trade is known as “cash and carry,” and it is not dependent on markets moving up or down.

Markets eventually normalize on their own

As the current futures open interest continues to rise, it reflects that markets are becoming even healthier, allowing even larger players to participate in derivatives trading.

Its CME listing was undoubtedly an important milestone for Ether, and this is confirmed by the $8 billion open interest mark.

The funding rate will adjust itself by welcoming more participants on the “cash and carry” side or by positions being terminated due to high costs.

It doesn’t necessarily end with billion-dollar liquidations, but it certainly raises the risk of them occurring. Nevertheless, these same contracts could have been used to drive Ether’s price up, netting the impact over time.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.