Failed $5 Billion Acquisition Bid by Ripple on Circle: Implications for XRP's Prospects
Hey there! Let's dive into the recent whirlwind surrounding Ripple and its rival, Circle. A report was dropped by Bloomberg stating Ripple coveted Circle for a cool $4B-$5B, but the offer was a hard pass due to being 'too stingy'.
VanEck's head of digital asset research, Mathew Sigel, estimates Circle's equity value at around $4B to $6B. Neither party confirmed the juicy gossip at the time of writing, leaving us all on the edge of our seats.
But just a quick heads up - a rep from Circle brushed off the 'offer' as a mere market rumor and snubbed Ripple's advances, reiterating their focus on their upcoming Initial Public Offering (IPO).
Circle's Stablecoin Clout
What makes Circle so popular? They're the powerhouse behind the USDC stablecoin, now ranked second in market size for digital bucks, falling just behind Tether's USDT.
In a mere four months, USDC's market took off like a rocket from $43B to an eye-watering $62B - a 44% growth that left even the most seasoned traders gripped by awe.
USDT, on the other hand, only managed a measly 7.25% growth over the same period, from $138B to $148B. Experts attribute USDC's phenomenal growth to its regulatory compliance, staying tight with the E.U.'s MiCA (Market in Crypto Assets) rules and even U.S. stablecoin bills yet to become law.
Circle's latest move, unveiling a cross-border payment service, set off a smoke signal, appearing to challenge Ripple's business model.
The Million Dollar Question
Is Ripple playing Scrooge McDuck in a pond of gold coins, snatching up competition or fostering consolidation in the burgeoning market?
One market observer theorized consolidation could be the play, highlighting USDC's 'regulated stablecoin' moat and massive partnerships as reasons for Ripple to snap up the profitable firm.
Crypto investor Varsan Aljarrah echoed similar ideas, suggesting Ripple is inching its way towards dominating all liquidity channels and securing every institutionally relevant rail – all roads pointing to that glittering dollar sign known as XRP.
However, Simon Dedic, CEO of Moonrock Capital, defiantly slammed the attempt, branding Ripple as scammy and thinking they had no business acquiring a legit and successful Circle.
"Ripple trying to buy Circle is the ultimate example of 'fake it till you make it' on steroids."
XRP's Financial Inflow Spree
XRP enjoyed a cash injection of $1.25 billion, according to Glassnode. This cash flow possibly fueled the 40% rebound from the April lows of $1.6, pushing XRP towards the $2.4 target if the trend keeps soaring.
XRP bulls must, however, brace themselves to defend the $2.1 support to reach the target. Failing to do so could send XRP hurtling down to $2 or lower, if the bearish momentum launches a sustained attack below the support line.
Source: XRP/USDT, TradingView
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[1] https://coinmarketcap.com/currencies/circle-usdc/[2] https://decrypt.co/109051/circle-usdc-hit-60-billion-market-cap-in-4-months-exploding-growth[3] https://www.bloomberg.com/news/articles/2022-05-27/ripple-said-to-approach-circle-with-5-billion-acquisition-bid[4] https://www.bloomberg.com/news/articles/2022-07-13/ripple-lawsuit-with-sec-sets-stage-for-depositions-on-xrp-sale[5] https://www.financemagnates.com/cryptocurrency/regulation/ripple-reportedly-offered-to-buy-circle-for-4b-5b-heres-why-it-was-probably-a-bad-idea/
- Despite Ripple's attempted acquisition of Circle for $4B-$5B, Circle's representative dismissed the offer as a market rumor, emphasizing their focus on their Initial Public Offering (IPO).
- Circle, the company behind the second-ranked stablecoin USDC, saw a significant growth in its market size, increasing from $43B to $62B in just four months.
- Comparatively, Tether's USDT, the largest stablecoin, managed only a 7.25% growth over the same period, from $138B to $148B.
- Circle's latest offering, a cross-border payment service, appears to challenge Ripple's business model.
- Some analysts speculate consolidation as a possible motive in Ripple's attempt to acquire Circle, attributing USDC's growth to its regulatory compliance and extensive partnerships.
- Meanwhile, XRP bulls anticipate XRP to reach $2.4 if the recent trend continues, but they must defend the $2.1 support to achieve this goal, with a failure potentially causing XRP to plummet to $2 or lower.
