Ripple Launches IPO, How Will It Influence the XRP Price?

Initial public offering (IPO), which is being launched by blockchain payment network Ripple, may bring down the value of the network’s cryptocurrency.

Several market participants explained which consequences Ripple should expect from this move.

Ripple IPO: a new start or failure for XRP?

Brad Garlinghouse, Ripple CEO, alluded last week, that the IPO may go live the next year.

Taking weakening XRP prices into account, the motivation driving the fundraising event is obvious to commentators, but it is unclear whether it can reverse the token’s fortunes.

Analyst Rakesh Upadhyay 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.”

Uphayday believes that Ripple’s hardships despite its numerous deals with banks and other business indicate that more troubles are underway.

The liquidity of XRP on mass selloffs is quite problematic, which is an alarming sign. Earlier CryptoTheNews published a report, detailing that 2019 saw bigger selloffs than ever before. Even the IPO announcement was not enough to push XRP/USD significantly higher.

Uphayday elaborated:

“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.”

Ripple XRP/USD chart. Source: Coin360

A different kind of selloff

Other analyst, Allen Scott, also shared the idea that the IPO may have terrible implications for Ripple.

He sees the IPO as a litmus test for buyers’ interest, especially after past XRP selloffs.

“Many see Ripple selling XRP regularly as a recurring ‘IPO’ already sans shareholder rights,” he stated, adding:

“So this might actually 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.”

Conversely, former eToro analyst Mati Greenspan believes that the IPO may strengthen the ties between Ripple and XRP.

“My feeling is that it would be positive. Additional funding for Ripple would mean less reason to sell off tokens,” he said.

Notable XRP investors share even less of those negative presentiments. Michael Arrington, the founder of TechCrunch and hedge fund Arrington XRP Capital, told followers to “disregard FUD” around the IPO.

On January 24 he tweeted, that “It’s healthy, and awesome if/when it happens.”