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Who’s Shane Ellis and is his view viable?

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https://medium.com/@_Crypto_Maniac_/shane-ellis-theory-xrp-to-500-unedited-8ca691545ee0

On Twitter/Medium I read about Shane Ellis. In short: he claims XRP can spike to $ 500 in a blink of an eye.

Looking back he also wrote about functionality of xCurrent which was at the time he wrote not disclosed by Ripple.

Who is he and does he have a point? Can we relate this to Kitao’s ‘flip of the switch’?

any thoughts?

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The guy that wrote this has no idea how markets work or he's got a malicious intent similar to most YouTube hypers (or just a clickbait to get some revenue cash). It can indeed spike on a single exchange to 500$ but that's not sustainable for more than a few seconds and no one would just want to lose a couple of million dollars in 5 seconds.

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26 minutes ago, iLeeT said:

The guy that wrote this has no idea how markets work or he's got a malicious intent similar to most YouTube hypers (or just a clickbait to get some revenue cash). It can indeed spike on a single exchange to 500$ but that's not sustainable for more than a few seconds and no one would just want to lose a couple of million dollars in 5 seconds.

Shane provides a detailed explanation as to how this would be sustainable, and it does seem plausible. It is also interesting to think about how some of the information Bob way has provided may tie into this.

For anyone interested in reading the Shane Ellis theory as well as his answers to the common questions/criticism, the 3 files are linked below.

https://drive.google.com/open?id=13BZ1OktpoFbg2zGD3zOzGL42OVa3iWmX
https://drive.google.com/open?id=1qtfEIe-VZ3ydDAWgWOS5fG4B2iYQxQMS
https://drive.google.com/open?id=11_BPjW_qqPYRpZuLVQfJLMkeXwkUopRW

I'd love to see feedback on these from someone who has the technical understanding and relevant work/trading experience needed to understand it all (instead of just non-technical retail investors driven by emotion).

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1 hour ago, XRPboi said:

I'd love to see feedback on these from someone who has the technical understanding and relevant work/trading experience needed to understand it all (instead of just non-technical retail investors driven by emotion).

Guess unfortunatly nobody will do it here...it's considered not kosher. Looks like in Sofia the markets do not work like in the rest of the world....

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1 hour ago, XRPboi said:

Shane provides a detailed explanation as to how this would be sustainable, and it does seem plausible. 

I only bothered to read the first document as it's pretty much a waste of time:

- xRapid doesn't use market orders, and even if we assume it does and assume that it doesn't have a setting to put a limit on the slippage (which it has) and someone is dumb enough to execute a $50m market order when selling at the destination the slippage would be probably more than $40M.

- xRapid is bi-directional so before it executes a payment it checks whether there's sufficient liquidity on both ends and only then it locks the transaction and executes.

- This question from the file is absurd - 'Whom would sell his XRP for sub 1$ knowing on another exchange (where demand is high) he
could get 500 times that price?' - Say you wipe out the entire order book, you lost about $40M on your payment and then your next idea is to start selling at the last price you bought? i.e. $500? Who exactly is going to buy from you when you could do it for thousand times less on an exchange like Binance for example? I could go on, but don't see the point really.

1 hour ago, XRPboi said:

I'd love to see feedback on these from someone who has the technical understanding and relevant work/trading experience needed to understand it all (instead of just non-technical retail investors driven by emotion).

:D 

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Posted (edited)
1 hour ago, iLeeT said:

 

- xRapid doesn't use market orders, and even if we assume it does and assume that it doesn't have a setting to put a limit on the slippage (which it has) and someone is dumb enough to execute a $50m market order when selling at the destination the slippage would be probably more than $40M.

- xRapid is bi-directional so before it executes a payment it checks whether there's sufficient liquidity on both ends and only then it locks the transaction and executes.

 

So.....I think this is a strawman argument. The point on slippage is valid, as far as it goes. But that isn't the whole story.

 

Here's a quote from somebody I listen to seriously, Galgitron.

 

Quote

It doesn't always make sense to use xRapid because if the price of XRP is too low, then the slippage will not make xRapid cost-effective, and the banks will revert to either xCurrent (if both banks are using it), or fall back to SWIFT if this transaction would be cheaper and fast 'enough'. IN NO CASES ARE THE BANKS GOING TO PAY ENORMOUS SLIPPAGE TO INCREASE THE PRICE OF XRP JUST TO BE ABLE TO SEND LARGE TRANSFERS!!! Beat that through your head. Even David Schwartz states growth will be slow and steady with small amounts to start. Banks are in the business to make money, not to make all us XRP-hodlers millionaires. I've seen endless references to the banks forcing the price of XRP up because they need to make larger transfers, but that's just not how it works.

BUT......liquidity still has to be there for the xRapid system to work, and high utilization is what will create the need for that liquidity. If there is one fact that most informed people in the XRP community agree on, this is it. Utilization is the ultimate price driver for XRP.  And xRapid is generally said by people who should know, to work better with a higher price than the price we have now. "Orders of magnitude higher" is the term I hear mentioned.

I'd be the first to say that RIGHT NOW utilization has almost NOTHING to do with XRP price. I do expect that to change, and when it does change, then that's when we can see if Shane was right. His first assumption is that XRP has to be decoupled from BTC, As of today, we aren't there. I expect that to take years. I don' think it even gets off the ground until we have legislation that says XRP is a currency.

This argument Ellis is making, btw, is also the same basic argument of my mentor Susie Crew. My opinion is that Susie knows a great deal about trading, and about settlement. I say that, and I don't give a rat's behind whether you believe it. There are some good traders here, but very few with long term experience sitting at a trading desk at a major institution. Maybe one or two, and they don't have to brag about it to impress anybody.

Now.....what isn't entirely clear is WHO is going to be providing the liquidity. Exchanges are only one potential source. That's one caveat about Shane's idea.

More from Galgitron.

Quote

 another alternative is for these banks to source their XRP from third party liquidity providers instead of exchanges. Fundamentally, everything works the same as if they were exchanges, but the XRP purchases/sales made with LPs do not show up as volume in the markets, only the XRP Ledger sees it, and this is very important; ALL xRapid transfers ALWAYS hit the ledger, even if they don't hit the markets right away.

LPs are expected to come online as bank demand for XRP increases. And even though they don't directly contribute to XRP market volume, they still increase overall demand for XRP, and that XRP will eventually come from the exchanges at some point, so it actually has a latent effect on increasing the volume, and hence demand, and hence price, and hence lambo.

 

and

Quote

One very important aspect to understand about xRapid that's unique to it, is that xRapid drives BOTH market AND ledger transactions, in a ratio of 2 to 1 because there's two exchange transactions and one ledger transaction for every xRapid transfer. In this way, it's possible to figure out approximately how much of the current price of XRP is due to speculation, or utility.

The easiest way to see this is by comparing the first and third figure shown on this page (total market exchange volume versus total ledger volume). This will suffice for now, but as further XRP adoption takes hold in other business sectors, the ledger volume should outstrip market volume, but we're a very long ways from that yet. By comparing these two figures, you can easily determine how much speculation versus utility there is. If the market volume is far greater than the ledger volume, THEN IT'S NOT XRAPID DRIVING THE PRICE!! WHY AM I YELLING?!!

Right now the ratio of ledger volume to market volume is roughly .30.  That's from XRP charts on the Ripple site.

https://xrpcharts.ripple.com/#/

Just a number to keep an eye on, and of course, some people already are. But the real takeaway on Shane Ellis Theory is that it depends on serious adoption of xRapid, and until that happens, whatever is going on with XRP price is not going to be driven by it.

 

 

Edited by dr_ed

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Bittrex Order book currently shows that from $0.27 cents to $1.49 totals $47,078 Dollars
through XRP/FIAT pairing (which is the same channel that will be used by RPPS)

- Simply transacting $47,078 at this point will instantly push the price of XRP to $1.49

What nonsense.  Bittrex does not dictate the price of the 99% of other exchanges out there, and nor does each individual exchange have that influence on the entire market.

This has been debunked so many times it's boring now.

  • Arbitrage bots will eat up that price difference in seconds.
  • Let's say they didn't and magically Bittrex's price "stuck" at $1.49 with a relatively tiny order in the grand scheme of things.  Who in their right mind will buy those XRP on Bittrex for $1.49, when they're available on Binance or Bitstamp for 27 cents? NOBODY.  Guess what happens next? Sellers on Bittrex lower their prices (whodathunkit?!).  They lower to $1.20.  Nobody biting. Lower to 90 cents.  Nobody biting.  Lower to 50 cents. Nobody biting.  Lower to 30 cents.  Nobody biting.  Lower to market value of 27 cents - nibble, nibble.

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Posted (edited)
7 minutes ago, ringer2 said:

Ellis’s theory just doesn’t hold up to scrutiny IMO. 

I don't know how it gained so much traction given its absurdly naive and ignorant understanding of how markets work.  The average retail investor surely understands that the market is made up of hundreds of exchanges, each one having slightly different sell prices for the same asset, and that those differences are arbitraged constantly.  If this "theory" was correct, it works both ways - a relatively small sell order would crash the market down as well as up.  Heck, most posters on this forum would have enough cash in the bank individually OR enough XRP to sell ... to pump the market 10c to 20c....or crash it by those amounts.

If this "theory" is right, why don't the believers of the theory pool together...let's say $50K and 5x XRP? Because it wouldn't work.  $50K is nothing - even at 27c that's buying up 174,362 XRP.  That's so tiny it's laughable.  These orders happen all the time - so why isn't the price going CRAZY leaping around from 27c to $2, back down again...zipping all across the board? Because of arbitrage and that XRP is on hundreds of exchanges.

Edited by 2ndtimearound

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Posted (edited)

The amount of people who believe this theory on YT and twitter are amazing and is a testament to the fact that most of them have no idea how markets work, have never seriously traded or have had any interaction with High Speed Bots which process 90% of trades these days in Crypto.

I think we got an answer on "who would sell the price down" the other day when someone all of a sudden bought XRP up to 77 cents on Bitbay. The answer of "who would sell it down" was, of course, "everybody" as within a short amount of time the price collapsed back to the average.

Edited by Archbob

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Another issue with it is that it assumes the markets would remain very illiquid at a time of rapidly increasing usage. Once large adoption begins the order books would have significantly more sell orders on the books so these large buy orders would not move the price anything like how he is suggesting. 

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Another reason "Shane Ellis Theory" is ridiculous:

The reason markets are liquid around the current price and not hundreds of dollars above it is because -- news flash! -- current price is where successful orders are likely to happen. If we climbed up 20 cents, a new set of market orders (buy and sell) would crop up, as people sought to place successful orders. This isn't rocket science.

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Posted (edited)

I find it extremely weird and even slightly disturbing (a la Idiocracy) that anyone thinks this is how markets work. 

These markets will likely need years of distribution, and several boom/bust cycles, to be able to sustain massively higher prices ($xxx++) without absurd selling pressure. It’s not something that can remotely be sustained with short term price spikes.

Edited by JA8

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12 hours ago, dr_ed said:

This argument Ellis is making, btw, is also the same basic argument of my mentor Susie Crew. My opinion is that Susie knows a great deal about trading, and about settlement. I say that, and I don't give a rat's behind whether you believe it. There are some good traders here, but very few with long term experience sitting at a trading desk at a major institution. Maybe one or two, and they don't have to brag about it to impress anybody.

Susie does know alot about the markets she works in, but she "wings it" with her knowledge on crypto.  She has said  "how can EOS be worth $5 and XRP is only 30 cents?" - someone has to tell her the basics of circulation versus price.   She also thinks XRP should be defined as a security of Ripple. 

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