XRP News Today: Legal Uncertainty Looms – Will SEC’s Appeal Backfire? BTC Hits $105K

SEC vs. Ripple: The Appeal and the Howey Test

XRP trailed the broader crypto market on Friday, January 17, as investors considered the SEC’s appeal-related opening brief. The appeal challenges the crucial Programmatic Sales of XRP ruling. In July 2023, Judge Analisa Torres ruled that programmatic sales of XRP did not satisfy the third prong of the Howey Test.

While investors took profits, legal experts expressed skepticism about the SEC’s chances. Amicus Curiae attorney John E. Deaton criticized the SEC’s reasons to appeal, stating:

“Because they’re stubborn and let it become personal. They don’t accept that sometimes, an agency losing a decision is what’s best for markets and investors. Remember, we’re applying a 1946 case about orange groves to 2025 technologies like blockchain and AI. SEC lawyers have forgotten that they’re supposed to wear the White Hat and not let it become personal.”

The Appeal: Examining the Second Prong of the Howey Test

If the SEC wins at the Second Circuit, the case will return to Judge Torres for further application of the Howey Test. Deaton believes the agency will likely lose again on the second prong of the Howey test. The second prong focuses on whether there is a common enterprise between investors, asking if people are pooling their money together in a shared venture.

Deaton focused on horizontal commonality, where multiple investors pool their money together, and their fortunes rise and fall together, similar to a mutual fund. He explained that the Second Circuit adheres to horizontal commonality as a necessary condition for finding a common enterprise.

Deaton believes that unless investors’ funds are pooled to share profits and losses, the SEC could lose again relating to programmatic sales on exchanges because the SEC can’t prove a common enterprise.

However, if the SEC wins at the Second Circuit, which Deaton thinks is unlikely, Ripple would petition the US Supreme Court to hear its case. The Amicus Curiae attorney believes the Supreme Court would take the case considering the legal significance and the increasing importance of digital assets.

Regarding the Supreme Court, Deaton said,

“The current makeup of the Supreme Court will decimate the SEC, potentially limiting its jurisdiction for decades.”

For Ripple and XRP investors, it could be a lengthy legal battle. However, the prospects of an appeal withdrawal are high.

SEC Chair Gensler Leaves the Agency Amid Harsh Criticism

SEC Chair Gensler left the SEC on Friday, January 17, amid intense criticism. CryptoLaw referred to the possibility of the Ripple case reaching the Supreme Court, stating:

“Your agency was condemned by federal judges for “gross abuse of power” and lacking “faithful allegiance to the law” and you put it on a path of jurisdictional restriction by the Supreme Court. It’s been a disgrace of a lifetime to have you chair the SEC.”

XRP Price Trends: Appeal Withdrawal Speculation Fuels Breakout

On Friday, January 17, XRP advanced by 1.50%, following Thursday’s 3.21% rally, closing at $3.2934. Despite the gains, XRP underperformed the broader crypto market, which gained 4.07%, taking the total market cap to $3.57 trillion.

XRP’s price trajectory remains hinged on sentiment toward the SEC’s withdrawal plans. Speculation about the SEC withdrawing its appeal could drive XRP above its January 2018 all-time high of $3.5505.

Conversely, suggestions of the SEC pursuing its appeal after Chair Gensler’s departure could trigger an XRP reversal.

Beyond the Ripple case, XRP-spot ETF-related news could also move the dial. A US XRP-spot ETF market could drive XRP demand, potentially leading to unprecedented highs.

Explore our expert analysis here on the SEC’s next move and its implications for XRP’s future.

Strategic Bitcoin Reserve Developments Drive BTC Demand

Meanwhile, bitcoin (BTC) revisited the $105k handle intraday on Friday amid reports of President-Elect Donald Trump prioritizing crypto policies.

Speculation around a Strategic Bitcoin Reserve (SBR) also intensified.

On Friday, Senator Cynthia Lummis commented:

“Working hard to get the Strategic Bitcoin Reserve and comprehensive digital asset legislation across the finish line.”

Senator Lummis introduced the Bitcoin Act in December, proposing the US government accumulate one million BTC, 5% of the total supply over five years. A US SBR would significantly tilt the supply-demand balance firmly in BTC’s favor.

Deaton recently suggested BTC could reach $1 million if the US government passes Senator Lummis’ bill, saying,

“If the U.S. Government (USG) passes Senator Lummis’ Bill and begins buying BTC, it will no doubt cause other nations to follow suit, just like with gold. It could literally create Nation State FOMO, and if that occurs, $1M per BTC happens a lot faster than people think.”

US BTC-Spot ETF Market Eyes Three-Day Inflow Streak

On January 16, the US BTC-spot ETF market reported net inflows of $626.1 million as investors considered the prospects of an SBR. The US BTC-spot ETF market could see a third day of inflows on January 17, boosting BTC demand. According to Farside Investors:

• Fidelity Wise Origin Bitcoin Fund (FBTC) saw net inflows of $326.3 million on January 17.
• Bitwise Bitcoin ETF (BITB) reported net inflows of $208.1 million.

Excluding flow data for BlackRock’s (BLK) iShares Bitcoin Trust (IBIT) and ARK 21Shares Bitcoin ETF (ARKB), the US BTC-spot ETF market reported net inflows of $599.7 million. Seven of the eleven issuers registered net inflows, underscoring market expectations of a surge in BTC demand.

BTC could get a further boost in demand if Trump repeals President Biden’s veto of the SEC’s SAB 121 regulation vote.

Staff Accounting Bulletin 121 (SAB 121) is an SEC requirement for companies, including banks, to hold crypto assets on their balance sheets even if they hold the cryptos under customer custody. The regulation makes it expensive for banks to hold crypto under custody for clients, limiting crypto services and BTC demand.

Bitcoin Price Outlook

On Friday, January 17, BTC advanced by 3.94%, reversing Thursday’s 0.25% loss to close at $103,733.

BTC’s price trajectory remains hinged on US BTC-spot ETF flow trends and Strategic Bitcoin Reserve (SBR) developments.

BTC-spot ETF inflows and favorable US SBR developments could push BTC toward its record high of $108,231. Conversely, weak support for an SBR on Capitol Hill or a resumption of BTC-spot ETF outflows could drag BTC toward $95k.

As Trump’s inauguration looms, traders should monitor the news wires for crypto-related chatter.

Market Outlook: XRP and BTC at a Crossroads

Both XRP and BTC are at critical junctures as regulatory and market dynamics unfold. XRP’s outlook depends on the SEC’s legal strategy, while BTC’s trajectory is tied to ETF flows and SBR developments. Broader shifts in crypto regulation, including potential SEC policy changes, are likely to influence market sentiment in the weeks ahead.

Stay updated with our expert analysis on these developments and their implications for crypto markets. Read more here.