Ripple’s announcement that it has been purchasing XRP on the secondary market is triggering a fresh debate on the state of the third-largest cryptocurrency by market cap.
In its Q2 Markets Report, the payments startup says it is buying an undisclosed amount of XRP through its subsidiary, XRP II. Ripple also says it sold $32.55 million worth of XRP in the second quarter through over-the-counter (OTC) transactions, in an effort to boost liquidity for its XRP remittance platform, known as ODL.
News of Ripple’s new status as an XRP buyer shot to the front page of the Ripple subreddit, where one poster suggested the XRP purchases could be a bullish signal for the asset.
“The fact that Ripple has stopped programmatic selling of XRP to the open market and is now buying back from the open market is huge IMO. It means Ripple is making enough money from their business that they can now afford to buy back up XRP thus lowering supply and increasing demand and therefore price.
They are still doing OTC sales, but given Ripple’s track record, these are all likely part of on-boarding contracts. Many of these companies will be holding onto the XRP they receive to utilize in future transaction flows.”
Others agreed, with some suggesting Ripple bought XRP in anticipation of the price going up.
Says one Redditor,
“A stock buy back can often be seen as one of the most positive things a company can do with their capital to reinvest in themselves under the opinion that the market has under-valued the price.
(Not that I’m suggesting XRP is a “stock”)
Let that sink in for a moment…”
But not all crypto enthusiasts are bullish on Ripple’s moves, with some equating the company’s purchase of XRP to stock buybacks — the practice of companies buying their own shares.
“You do realise most CEOs and executive teams around the globe have used share buy backs as a way to artificially drive up the price of their company’s stocks allowing them to cash out at a higher price? Basically a legal way of insider trading.
Now substitute in what I’ve just mentioned the word ‘shares’ for ‘XRP’ and hopefully you’ll see why this is nothing more than Ripple execs and VCs looking to unload their personal stash at a higher price at your expense.”
Ripple says it may continue to buy XRP at market prices in the future as it looks to play a responsible role in boosting liquidity in the XRP remittance market.