Q9 Weekly | Ripple Effects

Q9 Capital
4 min readMar 23


23 March 2023

Ripple Effects

  • BTC reaches highest level in 9-months following banking sector concerns
  • Rally largely driven by US investors
  • XRP surges as legal case reaches final stage

Digital assets continued their rally in the face of ripples in the banking sector, and XRP surged by double digits amid speculation Ripple’s lawsuit against the SEC will soon end.

Concerns around banking and the debasement of the dollar have led to growing interest in Bitcoin as a potential insurance asset. This could cause many investment managers, who were watching from the side-lines, to recalibrate portfolios.

BTC has rallied from $20k on March 11th, surpassing $28k for the first time in nine months and has outperformed basically every altcoin, including Ethereum. The fact that Bitcoin has moved in a very different way from the equity markets, in particular, is positive news for its safe haven and diversification narrative.

BTC, ETH and SPX Performance (%), YTD

Source: TradingView

On a risk adjusted basis (Sharpe ratio), Bitcoin is now the best performing asset of 2023 compared to a range of equities, fixed-income securities, indices, and commodities.

Risk Adjusted Performance (Sharpe Ratio), YTD Through March 17 2023

Source: Galaxy Research

The rally appears to be driven by US investors. Analysis by Matrixport shows that American buyers are leading the safe-haven bid for the cryptocurrency following recent bank failures.

BTC Rally Driven by Americans

Source: Matrixport

ARK Invest have upgraded their bull case estimate that the BTC price will near $1.5mn by 2030 and will be pushed by institutional investors allocating between 2.5–6.5% of their portfolio into BTC.

Source: Ark Invest

Ripples on the Water

XRP surged amid rumours the token’s issuer Ripple may soon settle — or emerge victorious — in its ongoing case against the SEC. The token, which is the sixth-largest globally by market value, is also being boosted by the broader crypto market sentiment.

The closely watched case will establish a critical precedent. The SEC accuses Ripple of breaching US securities laws by selling XRP without first registering it with the regulator. Ripple contests the SEC’s allegations, maintaining the view that XRP should be considered a digital currency rather than a security.

XRP/USDT Performance, 1 Month

Source: TradingView

After more than two years of protracted legal conflict, all of the evidence has been heard, and there remains nothing left but for Judge Analisa Torres of the Southern District of New York to issue a verdict. Those with a stake in the outcome, which will reverberate throughout the crypto sector, have been attempting to divine when a judgment might land, based on the judge’s past ruling patterns. Some believe a resolution is only days away.

If the court rules that XRP is a security, it could follow that almost all other crypto tokens are too, making them subject to the SEC’s supervision. Not only would this impose burdensome registration and reporting requirements on crypto firms, but it also may have legal consequences for entities that have issued tokens or helped people to trade them without SEC approval.

Ripple is challenging the SEC’s analysis on two fronts: It is arguing that its sale of XRP does not qualify as an investment contract because no contracts were signed when the transactions took place, and separately, that XRP does not satisfy the prongs of the Howey test.

Source: Ryan Selkis, Twitter

Monica Long, president of Ripple, says she is “very hopeful” about achieving a positive resolution to the SEC battle, adding she thinks it will reach a conclusion sometime this year. Nobody knows precisely when the verdict will land; it could be days, weeks, or even months. Until then, the crypto industry must wait.

The ruling will be a critical moment for digital assets and, whichever way it goes, ripple effects will be felt across the industry.

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