Should I sell my XRP?

I received two great questions from a reader last night:

1. Do I believe Jed McCaleb is really going to sell his stake in ripple (9 billion XRP)?
2. If so, should I sell my XRP before Jed does?

Before I answer, let me reiterate that I can’t give financial advice. I can only give my personal thoughts on the situation. Take them with a grain of salt. To answer the first question: I definitely believe Jed’s going to sell his nearly 9 billion XRP. Since his original announcement that he was selling, he’s made a second post on XRPTalk titled “I won’t leave you guys behind.” In that post, he goes on to say: “You guys were the first to believe in me and what ripple could be and I want to make sure you guys are not left hanging. So in my new project, we will have a way to help pre-me-selling-announcement ripple holders.”

In effect, he’s promising ripple holders (at least the ones who held XRP before May 22) that he’s working on a way to give them a bonus stake in his new project (presumably if they want to invest in it). That’s an indication to me that Jed’s definitely – beyond a doubt – going to sell. Reading between the lines, I assume it’s going to be a ripple competitor.

Should I sell my XRP before Jed does?

The logical answer is yes. Jed’s impending sale, which is scheduled to start on June 4, 2014, is going to more than double the number of outstanding XRP on the market. That means the price of Ripple should logically fall by more than half. Simple math prevails: if you’re doubling the availability of a commodity, and there are no new investors, the price should fall by half. Think of it like a 2:1 stock split. There have to be additional buyers for prices not to fall by half. Keep in mind, Jed’s stake is larger than the current pool of XRP on the market, and his selling will likely additional selling from others. In another post (Analyzing Jed McCaleb’s departure and the ripple currency plunge (XRP)), I predicted Ripple prices could fall as much as 90 percent to $0.0006. That’s yet to be seen, but to be safe, I personally sold nearly half of my stake in XRP. If ripple prices fall below the price I sold at, I’ll start buying again. If ripple prices don’t fall that low, it means Ripple Labs or another investor has stepped in with a serious chunk of cash to prevent a catastrophic price collapse. In either case, I prefer to limit my exposure by selling half of my XRP. If ripple falls to 25 percent of current levels, I can buy back in and basically be flat.

Please remember that these are just my personal opinions. I’ll be watching the ripple exchange with interest on and after June 4!

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