Bloomberg reported that Ripple offered $4 – 5 billion to buy Circle. The offer was rejected due to low valuation. Bloomberg noted that a Ripple representative declined to comment on the issue.
Circle could not comment as the company was in a quiet period with the SEC. As a reminder, Circle prepares for an IPO, which was delayed due to recent market volatility, which was triggered by Trump’s tariffs.
Subsequently, rumors emerged indicating Ripple raised its offer to as much as $20 billion. The post on X was the source of these rumors, so they are significantly less credible compared to Bloomberg publication.
Regardless of whether Ripple increased its offer or not, it is clear that the company is ready to spend some money. What’s going on and how it will impact the crypto market?
Ripple’s XRP enjoyed a strong rally after Donald Trump won the U.S. presidential election. The inclusion of XRP in the strategic crypto reserve project and the settlement of a lengthy litigation against the SEC served as the key drivers for the move.
XRP, which was hovering in the $0.50 – $0.60 range before Trump’s election, rallied above the $3.00 level and stabilized near $2.00. Ripple continues to hold a substantial amount of XRP and issues the coin at a steady pace to cover its expenses, so it’s not surprising to see that the company wants to use the recent rally as an opportunity for attractive M&A deals.
Creating a stablecoin from scratch is an extremely challenging task. The early mover advantage is enormous in the stablecoin world. USDT market cap has recently exceeded $149 billion, while USDC market cap has crossed the $61 billion mark. Their closest rival, DAI, has a market cap of just $5.3 billion.
PayPal, which launched its PYUSD stablecoin in 2023, was able to raise its market cap to just $872 million despite the size of the company’s client base.
XRP wants to acquire USDC ahead of the anticipated regulatory changes in the U.S., which will make this stablecoin the undisputed market leader in the country (Tether has already announced that it will keep USDT as the stablecoin for emerging markets and release a new product for the U.S. when the regulations appear).
Most likely, Circle’s management team will compare the potential IPO valuation with Ripple’s offer, choosing the most suitable option. The potential deal will certainly strengthen Ripple and its XRP. However, it does not threaten USDT market dominance outside the U.S. and EU. Within these markets, USDT’s fate depends on the local regulations.