The blockchain and crypto spheres are continually growing. Some of the involved firms now consider going public to consolidate their market grip. In that context, the blockchain payment network, Ripple, recently announced that it might launch an initial public offering (IPO). If that happens, it will devalue the crypto in which it holds a majority stake.
Most of the market analysts believe that Ripple going public has probable implications for the fate of the XRP altcoin.
Will It Be A Boom or Bust?
Brad Garlinghouse, Ripple’s CEO, last week, said that an IPO might occur within the next 12 months. In the scenario of flagging XRP prices, the momentum behind a major fundraising event is highly likely as noted by many commentators. But, it is not yet clear whether the IPO move will reverse XRP’s fortunes. One contributor said:
“Though Ripple is making inroads, it is yet to disrupt the global money transfer system in a major way. Initially, after the IPO, the market participants might be patient but they will soon seek results. When the results don’t come through, it will hurt prices.”
For some analysts, Ripple’s lack of progress in spite of its many deals with major banks and other firms around the world shows that harder times are still to come. A clear sign that liquidity is still a significant hiccup is Ripple’s massive selloffs of XRP. According to previous reports, the selloffs were more prominent in 2019 than ever before. Also, the IPO announcement failed to move XRP/USD considerably higher.
One analyst stated:
“A sharp fall in price will make it difficult for Ripple to raise money. It has been selling tokens, which shows that it is not making enough money to fund its operations. But unlike before, after the IPO, Ripple will also not be able to sell tokens without announcing beforehand. When announced, this will again hurt prices.”
A Different Type of Selloff
The idea of an IPO may become a significant test for Ripple. It can be used to determine buyer appetites that are already under scrutiny after the discovered XRP selloffs. Another commentator said:
“Many see Ripple selling XRP regularly as a recurring ‘IPO’ already sans shareholder rights. So this might hurt Ripple — it would put into question not only its operational costs and business model of dumping on the market but, more importantly, the existence of XRP.”
By contrast, ex-eToro analyst Mati Greenspan said that an IPO could allow Ripple to enhance its position vis-a-vis XRP. He commented:
“My feeling is that it would be positive. Additional funding for Ripple would mean less reason to sell off tokens.”
Maybe as expected, most of the prominent XRP investors share less sense of foreboding. The founder of hedge fund Arrington XRP Capital and TechCrunch, Michael Arrington, advised his followers to “disregard FUD” around the IPO. He tweeted on January 24, reacting to Garlinghouse’s announcement saying that it is incredible and healthy when and it the IPO happens.