Altcoin XRP May Be Impacted by IPO

Altcoin XRP May Be Impacted by IPO

Some crypto enthusiasts believe that Ripple’s upcoming initial public offering (IPO) will negatively impact the cryptocurrency, in which the company holds a majority stake, Cointelegraph website reported.

CEO Brad Garlinghouse earlier said his company may go public the next year.  

Commenting on the offering, 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.”

Despite deals with major banks, the analyst believes that the company is still facing hard times amid lack of progress.

Among the signs reflecting that the company is facing liquidity problems is the mass selloffs of the altcoin, especially in 2019. The announcement of the IPO failed to push the XRP price higher currently.

Upadhyay said:

“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.”

Allen Scott, head of Cointelegraph Markets, said the offering will test traders’ sentiment. “Many see Ripple selling XRP regularly as a recurring ‘IPO’ already sans shareholder rights.”

He indicated that it would impact Ripple’s operational costs as well as XPR’s existence.

The company’s CEO Garlinghouse sees the traditional public offerings would become more common in the cryptocurrency and blockchain space this year.

During his speech at the World Economic Forum, the CEO said:

“In the next 12 months, you’ll see IPOs in the crypto/blockchain space. We’re not going to be the first and we’re not going to be the last, but I expect us to be on the leading side… it’s a natural evolution for our company.”

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