- Ripple has acquired Hidden Road for $1.2 billion in its largest acquisition to date, despite XRP’s price drop following the announcement.
- Ripple hopes the acquisition will boost adoption of its RLUSD stablecoin, which currently represents less than 0.04% of the stablecoin market.
- The acquisition cost is approximately four times the total market capitalization of RLUSD, which has significantly lower trading volume than competitors like USDT.
Ripple has acquired prime brokerage firm Hidden Road for $1.2 billion in a combination of cash, equity, and XRP tokens, the company announced Tuesday. CEO Brad Garlinghouse revealed the transaction, which represents Ripple’s most expensive acquisition in its history, in a morning statement. Despite expectations that the news would boost XRP’s value, the token’s price declined following the announcement.
The acquisition cost significantly overshadows the market capitalization of Ripple’s stablecoin RLUSD, being approximately quadruple its value. According to Garlinghouse, Hidden Road will utilize RLUSD as collateral for prime brokering activities, “including cross-asset (crypto and traditional instrument) trades.”
Ripple claims RLUSD is “the first stablecoin to enable efficient cross-margining between the digital asset space and traditional markets,” though industry observers note that various stablecoins have served similar functions in leveraged contracts across traditional and digital assets for years. The press release did not clarify why Hidden Road couldn’t use other established stablecoins for the same purpose.
Limited Market Presence Despite Major Investment
RLUSD currently occupies a tiny fraction of the stablecoin market. CoinMarketCap data shows less than $50 million in RLUSD trading volume over the past 24 hours, while CoinGecko reports even less at under $7 million. By comparison, market leader USDT (Tether) recorded over $80 billion in trading during the same period.
The stablecoin’s market capitalization represents less than 0.04% of the entire stablecoin industry, raising questions about the proportionality of Ripple’s massive investment in Hidden Road relative to RLUSD’s current adoption.
XRP price Reaction Contradicts Expectations
Unlike RLUSD, which maintains a stable $1 value by design, XRP’s price is supposed to respond positively to favorable corporate developments. However, contrary to expectations, XRP’s value declined following Garlinghouse’s announcement of the acquisition.
The negative price movement suggests investors may be questioning the strategic value of the acquisition or its potential to significantly impact Ripple’s core business and token value. The disconnect between the substantial acquisition cost and the limited market position of RLUSD appears to be a factor in the market’s cautious response to the news.
✅ Follow BITNEWSBOT on Telegram, Facebook, LinkedIn, X.com, and Google News for instant updates.
Previous Articles:
- Cboe Files with SEC for Canary’s Sui ETF as Crypto Fund Wave Continues
- Bitcoin Resilience: Bernstein Says 26% Drop Shows Strong Institutional Demand
- Binance to Delist 14 Tokens Amid Stricter Listing Requirements
- Ripple Acquires Hidden Road for $1.25B to Boost XRP Ledger Usage
- Man jailed 19 months for crypto scheme linked to money laundering
