Valhil Capital’s research suggests that the fair value of XRP may be between $3.5K and $22K, affected by the ongoing Ripple-SEC lawsuit.
As per recent revelations by Jimmy Vallee, the Managing Director at Valhil Capital, and Molly Elmore, the Blockchain Businesses CMO of Valhil Capital, the current price of XRP, the native cryptocurrency of the Ripple network, may be severely undervalued. The duo has conducted an extensive two-year research and published a Whitepaper stating that XRP’s fair value should range between $3.5K to $22K, rather than its present market price.
Elmore made the comprehensive research paper available to the public through her Twitter account. The research aimed to clarify the market worth of XRP using six distinct evaluation models, and uncover the negative repercussions of the SEC lawsuit against Ripple on XRP’s valuation.
The Models Behind XRP’s Fair Market Value
To understand the market value of XRP, Valhil Capital applied six models for their study:
- Pipeline Flow Model
- Athey and Mitchnick Model
- 99-Year Golden Eagle Model
- Discounted Cash Flow Model
- Collateralization Model
- Quantum Liquidity Model
These models were developed using parameters such as Global Transaction Volume, Daily transaction value, XRP circulating supply, and XRP transactions per second.
Ripple vs. SEC: The Impact on XRP
Ripple, the company behind XRP, has been mired in a prolonged legal battle with the US Securities and Exchange Commission (SEC). Following the SEC’s charges against Ripple concerning the sale of XRP, the cryptocurrency experienced a drastic drop in price due to panic selling and delisting from multiple platforms.
In response to this, Valhil Capital proposed to the Federal Reserve to sell its XRP holdings at a price exceeding the current market value, a move aimed at highlighting possible “regulatory capture” and triggering a debate on its consequences. This initiative raised questions about the SEC lawsuit’s financial damage and its deterrent to XRP’s adoption, leading Valhil Capital on a mission to determine the fair market value of XRP.
Establishing the Fair Market Value of XRP
In an attempt to determine XRP’s fair market value, Valhil Capital established a Confidential Committee in 2022. A smaller Valuation Committee consisting of experts in quantitative and financial valuations emerged later in the same year.
Over several months, the Valuation Committee created six unique valuation models. Fair market value, as opposed to market value, is an estimation of an asset’s worth based on numerous factors, including market conditions, supply and demand, among others. Elmore stressed that the prices derived from these models aren’t future price predictions but instead estimations of XRP’s price, had the SEC lawsuit not occurred.
The results from the models suggest that, excluding extreme values, XRP’s fair value lies between $3.5K and $22K. This value is up to 4,203,186% higher than the current market price.
Ripple vs. SEC: The Current Situation and Future of XRP
The SEC launched a legal case against Ripple in the winter of 2020, accusing it of a $1.3 billion unregistered security offering and classifying XRP as a security. Two and a half years down the line, the case still continues.
Ripple refutes these claims, arguing that XRP is a currency and not a security. The price of XRP fell sharply as several exchanges began to delist it due to fear of the SEC.
Ripple vs. SEC: An Unending Battle
The legal battle between Ripple and the SEC is far from over. Ripple’s defense revolves around the so-called Hinman Speech. This refers to a statement by former director of the SEC’s Division of Corporation Finance, William Hinman, that the agency didn’t consider Ethereum a security at the time.
Ripple’s lawyers hope to uncover more about Hinman’s decision-making process to influence the classification of XRP. In October 2022, they successfully obtained the documents concerning this, tipping the scales in Ripple’s favor.
Ripple vs. SEC: The Impact on XRP’s Price
Even as Ripple fights its case, the SEC has lodged charges against leading cryptocurrency exchanges Coinbase and Binance. Yet, XRP has shown resilience despite these pressures. Over the past week, XRP has been the only major altcoin in the green, albeit slightly.
A significant event is set for June 13th – the SEC is required to provide unredacted emails of Hinman’s internal communications. Depending on the outcome, it could influence XRP’s price significantly. With a 23% increase in XRP’s price in the past 30 days, investors seem to be optimistic about a favorable verdict.
The future of XRP remains uncertain. However, the revelations from Valhil Capital’s research offer new perspectives on its potential market value, making it an intriguing asset to keep an eye on.