First Mover: XRP Plunges 20% as Traders Assess SEC's Ripple Suit

PLUS: Scaramucci's SkyBridge invests $25M in own bitcoin fund

December 23, 2020 Everything you need to make sense of the crypto markets and beyond Sponsored By: By the CoinDesk Markets Team Edited by Bradley Keoun If you were forwarded this newsletter and would like to receive it, sign up here.  Bitcoin (BTC) +0.1% $23,850 Ether (ETH)  -0.1% $616 (Price data as of Dec. 23 @13:30 UTC) (Editor's note: This issue of First Mover will be our last for 2020. We are taking a much-needed break, resuming Monday, Jan. 4. Please allow us this opportunity to thank you, our subscribers, for coming along during a year full of all sorts of unexpected twists. From our perspective, 2020 will in hindsight prove to be a pivotal year in the development and growth of the crypto industry and digital-asset markets, and more broadly, in monetary history. We are grateful that you have trusted us to help keep you informed. Happy holidays to all, and best wishes in 2021.) TODAY: Price Point: Bitcoin was little changed, struggling to sustainably break past $24,000.  Market Moves: The SEC's suit against Ripple has triggered a steep sell-off in price for the payments token XRP. Meanwhile, prices for Chainlink's LINK token have increased seven-fold this year, ranking it first in the CoinDesk 20 on 2020 cumulative returns. What's Hot: Argentines turn from dollars to stablecoins, Scaramucci's SkyBridge invests $25M in own bitcoin fund, FTX's futures contracts on Coinbase IPO imply $58B valuation, Trump blasts relief checks in $900B coronavirus-aid bill as insufficient.  Price Point Bitcoin (BTC) was little changed, with prices appearing unable to hold levels above $24,000.    "Bitcoin has moved vertically for a few weeks now and pullbacks will happen," the Norwegian cryptocurrency-analysis firm Arcane Research wrote Tuesday in a weekly report.    The bigger story Wednesday in digital-asset markets was the steep plunge in prices for the payments token XRP (XRP), down 20%, the most for a single day since March, as traders assessed the fallout from the U.S. securities regulators' case against Ripple. (Read Market Moves below for more on this.)     In traditional markets, European stocks rose as trade and transport connections reopened with the U.K., and U.S. stock futures were higher after President Donald Trump demanded that relief checks stipulated in the just-passed $900B coronavirus aid bill be increased to $2,000 from $600. Gold strengthened 0.2% to $1,864 an ounce.  SPONSORED BY CME Ether futures are coming   Launching Feb. 8, 2021: Ether futures from CME Group, designed to help market participants manage ether price risk (subject to regulatory reviews).    The new contract joins bitcoin futures and options as part of CME Group's growing suite of cryptocurrency risk management tools.    Ether futures will be cash-settled and based on the regulated CME CF Ether-Dollar Reference Rate.   Ether futures will enable traders to easily express a view on, or manage exposure to, the rapidly growing ether cryptocurrency. The contract will also offer price discovery through the transparency of futures, where all participants see the same prices and quotes and then trade on a regulated exchange. Traders will have an opportunity to save on potential margin offsets with bitcoin futures, plus add the capital efficiency of futures contracts.    Find out more about ether futures at cmegroup.com/ether. Market Moves Candle chart of XRP token's price since mid-November, showing the deepening sell-off on Tuesday and Wednesday as the SEC filed a suit against Ripple. (TradingView/CoinDesk)    It's a case of sell the rumor, sell the fact.   A day after Ripple CEO Brad Garlinghouse warned that his company might be sued by the U.S. Securities and Exchange Commission, the regulator followed through, accusing the company of violating federal laws in its $1.3 billion of sales of the XRP payments token over a seven-year period.    Prices for XRP (XRP), which had fallen for three straight days amid speculation that an SEC action was imminent, tumbled 13% on Tuesday as the suit was unveiled, and then more than 20% Wednesday as the potential fallout from the case became clearer.   The decline pushed the token's price to the lowest in a month, shaving its year-to-date gain to 67%. While that performance may sound impressive to U.S. stock traders who have seen the Standard & Poor's 500 Index climb 14% in 2020, it pales in comparison to bitcoin's 227% year-to-date increase and ether's 384%.    Executives with San Francisco-based Ripple, which runs a payments network, had long maintained that XRP was separate from the company, even though the token was often referred to as "ripple" through early 2018 and shared a logo until later that year, as reported by CoinDesk's Nikhilesh De.    The token's status under U.S. securities law has been a subject of debate for several years, with former Commodity Futures Trading Commission (CFTC) Chairman Christopher Giancarlo saying at one point that in his view, XRP should be "considered a currency or a medium of exchange," not a security.   The SEC didn't see it that way: "At all relevant times during the offering, XRP was an investment contract and therefore a security subject to the registration requirements of the federal securities laws," according to the lawsuit.   CoinDesk's Muyao Shen reported that the market for XRP could quickly dry up, since cryptocurrency exchanges that serve as a primary venue for purchases and sales might choose to delist the token rather than risk being designated as unregistered securities exchanges.        "That immediate disappearance of a massive portion of market liquidity and participants would cause the asset to dump heavily in price," John Willock, CEO of Tritum, a diversified crypto services provider, told Shen.   MoneyGram, a publicly traded money-transfer company that gets fees from Ripple to use an "on-demand liquidity platform" as well as XRP, said in an emailed statement that it would "monitor the situation."    But OSL, the first regulated digital-asset trading and brokerage platform in Hong Kong, wasn't so patient: Early Wednesday, the company announced plans to suspend trading in XRP.   Read More: SEC Victory in Ripple Case Would Render XRP 'Untradeable,' Market Pros Predict Chainlink's LINK token led the ranking of year-to-date returns for digital assets in the CoinDesk 20. (CoinDesk Research)  There's not a whole lot more to say at this point about bitcoin's spectacular rally in 2020 (see above) and ether's even-more-spectacular rally (see above.)     But for the sake of posterity, and to confer bragging rights, First Mover decided to publish the latest ranking of year-to-date returns for digital assets in the CoinDesk 20, as it stands with just eight days to go in 2020.   The best-performing asset in the group was Chainlink (LINK), whose token price jumped seven-fold this year.    Chainlink benefited from the frenzy of speculation over the future of decentralized finance, a subsector of the cryptocurrency industry known as DeFi, where entrepreneurs are building semi-automated trading and lending systems atop blockchain networks, primarily Ethereum.   "Investors that put capital to work in this thematic sector of digital assets generally outperformed bitcoin and the digital-asset market beta in 2020," according to a report this month by the digital-asset manager Vision Hill.    Of course, one really only had to be in the digital-asset markets, and stay in, to make money this year. Returns were positive for all but one of the CoinDesk 20 members.  - Bradley Keoun Sponsored Content   CME: The Past, Present and Future of Institutional Bitcoin In December of 2017, bitcoin's price was surging, even fighting towards $20,000. Meanwhile, CNBC and the cable news set featured a constant string of crypto industry insiders bringing the space to a new audience. It was into that environment that on December 17, 2017, CME Group launched bitcoin futures. Bitcoin Watch (Editor's Note: CoinDesk's Omkar Godbole, who writes Bitcoin Watch, is off this week.)  Bitcoin. DeFi. Ethereum 2.0. The biggest trends in crypto this year began to move the needle in the rest of the world. Multi-billion dollar funds bought bitcoin as an inflation hedge. Institutions began discussing the merits of decentralization. And the banking sector warmed to crypto.    CoinDesk's 2020 Year in Review covers the major events, ideas and themes in crypto, and why they matter. The series is a comprehensive collection of op-eds, essays and interviews from some of the biggest names in crypto, published throughout the month.   Read more on how 2020 was crypto's biggest year yet. What's Hot Why Argentines are turning from dollars to stablecoins like DAI (CoinDesk)  Crypto needs to engage with the world, Informal Systems CEO Ethan Buchman writes in op-ed (CoinDesk Opinion)  Ethereum developer Virgil Griffith will likely face trial next September (CoinDesk)  Scaramucci's SkyBridge has invested about $25M in its new bitcoin fund (CoinDesk)  Futures contracts on not-yet-publicly-traded Coinbase shares soar on FTX crypto exchange, implying $58B valuation (CoinDesk)  Nasdaq-listed bitcoin miner Riot buys 15K new computing units from China's Bitmain (CoinDesk)  Analogs The latest on the economy and traditional finance President Donald Trump demands changes to $900B coronavirus-related spending bill, calling it a "disgrace" and demanding that relief checks be upsized to $2K from $600 (NYT)  U.S. Treasury Department working group says policymakers need to consider major changes to make money-market funds less vulnerable to redemption runs (Reuters)   Airlines to bring back thousands of workers after passage of coronavirus aid bill (WSJ)  U.S. Treasury yields fall as investors shrug off new stimulus measures passed by Congress (WSJ)    Tweet of the Day Looking to make someone (or just yourself) happy this Yuletide holiday? Give the gift of crypto art.   As part of the launch of Most Influential 2020 list, CoinDesk is auctioning off 12 original artworks that accompany this year's list of honorees.   The NFTs were created by leading digital artists including Alotta Money, XCopy, Osinachi, Matt Kane, Sarah Zucker, Yonat Vaks, and Olive Allen. They are available at Nifty Gateway and Super Rare (Matt Kane). The artists will donate 50% of the proceeds to charities of their choice, under an arrangement with cryptocurrency donations company The Giving Block.   Learn more about the Most Influential 2020 NFT art auction, running to Dec. 31. Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.  ATTENTION: Scammers have been sending fraudulent emails with links to sites disguised to look like coindesk.com. If you are in doubt about a link, type https://www.coindesk.com directly into your browser; do not copy and paste. Remember, if something seems too good to be true, it probably is. 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