‘Well that’s a no-brainer.’ Why would you not take a 10-1 risk-reward that has a catalyst around it?”
Raoul Pal, former Head of European Hedge Fund Sales – Equities and Equity Derivatives, has said in an interview that the SEC v. Ripple lawsuit made XRP very attractive as an investment.
The current founder of The Global Macro Investor and Exponential Age Asset Management, spoke to Youtube’s Thinking Crypto about BTC, ETH, regulation, metaverse, NFTs, and macro investing, but the risk/reward ratio on XRP was a particular highlight.
Raoul Pal said he bought XRP about a year ago when the SEC lawsuit was filed and precisely because of the lawsuit.
“I bought it for the reason that: a) it does have use cases and it is being used, and b) the court case is a phenomenal risk-reward.”
He further detailed what he considered to be the risk-reward for XRP at the time: 10 to 1.
“It got heavily discounted in the price, and then I looked at it and thought, ‘Well, what’s it going to do? Fall 100% from here to zero? But if it gets solved, it’s 10 times.’ And I’m like, ‘Well that’s a no-brainer.’ Why would you not take a 10-1 risk/reward that has a catalyst around it?”
If Raoul Pal did buy XRP at the of the lawsuit filing, each XRP might have cost between $0.20 and $0.50, which was the price range between 22 December 2020 and early April 2021.
Since the lawsuit is not over and assuming nothing changed in terms of risk/reward besides the price, the r/r ratio at current prices – XRP at $0.90 – may still be a buying opportunity for investors following Raoul Pal’s calculations as his target may be around $2 and $5 for each unit.
The video can be found here (32:41)
The lawsuit has frustrated many investors along the way. Settlement is showing no signs of happening soon, but Magistrates Sarah Netburn and Analisa Torres have been praised by many, including Ripple CEO Brad Garlinghouse.
As for the court case, Judge Netburn has most recently allowed both parties to re-brief regarding the deliberative process privilege in the context of the SEC’s refusal to hand over documents about the agency’s opinions on BTC, ETH, and XRP and more that could be critical for Ripple’s fair notice defense.
A few days ago, XRP Holders attorney John Deaton made a somewhat controversial statement about the state of the crypto space post-lawsuit if Ripple does win, including that only BTC and XRP would be safe.