The CEO of Ripple Brad Garlinghouse contests Mike Novogratz’s bearish prediction concerning XRP.
The whole issue stems from statements made by Novogratz during the National LINC 2020 conference in Florida, during which he not only explicitly criticized Ripple and XRP but also said that in 2020 this cryptocurrency will underperform the cryptocurrency market, as it did in 2019.
“It did underperform immensely last year. I think it will underperform immensely again this year and it’s just because of the supply”.
Thus, according to Novogratz, the reason for this disappointing performance of XRP is to be attributed to the behaviour of the Ripple company, which owns 56 billion XRP tokens out of the existing 100 billion.
Ripple originally owned 80 billion XRP tokens, but now only 56 billion are in the hands of the company, of which 48,9 billion are in escrow and are currently not usable by the company. However, every month some of these tokens are unlocked and become available to Ripple.
Novogratz says the company is selling its XRP tokens in a similar way to a company that continuously sells its shares.
The response from Ripple’s CEO, Brad Garlinghouse, was:
“XRP has outperformed BTC and the broader crypto market in 2020. XRP is up 44% (19.1 to 27.5) vs BTC’s 33% (7,100 to 9,500) so far this year”.
Ahem… IS THIS THING ON… can I get a fact check on aisle CoinDesk?
— Brad Garlinghouse (@bgarlinghouse) February 5, 2020
To tell the truth, this statement by Garlinghouse does not deny Novogratz’s prediction, not least because the current value of XRP, about $0.28, is still lower than $0.36 at the beginning of last year. So, even if it were true that during the first abundant month of 2020 its price has risen, it is also true that it has not yet managed to recover the losses accumulated during 2019.
Proceeding with the comparison with bitcoin, at the beginning of 2019 BTC was worth about $3,700, while now it’s worth more than double.
Novogratz’s predictions are not based on XRP’s short-term price fluctuation, but year-on-year, hence Garlinghouse’s statements cannot refute them.
However, Novogratz himself, who is the CEO and founder of Galaxy Digital, has also stated in a series of tweets that his company is a major investor in Ripple, thereby reassessing things a bit.
1. GLXY is a big investor in Ripple Labs. I would like to see them do well. @bgarlinghouse has done a great job as ceo. I commented the XRP tokens underperformed $btc last year because Ripple owns a lot of them. I have been almost solely long $btc for the past 15 months.
— Michael Novogratz (@novogratz) February 6, 2020
In fact, he praised Garlinghouse’s work as CEO of Ripple but also said he was surprised that in 2020 the price of XRP increased so significantly.
In fact, he wrote that Bitcoin has now found its real use case as digital gold, while all other cryptocurrencies are still in a testing phase and will not be able to replace Bitcoin in its current role.
“The price of XRP will be determined like all prices. If there are more buyers than sellers (and the company has a lot of control here) the price will rise. The company needs to distribute in a rational way at the same time building a real and scalable use case. I hope they do”.
In this regard, Ripple’s Vice President, Head of the Global Institutional Markets Team, Breanne Madigan, said:
“These statements make clear that Mike doesn’t understand how Ripple manages its stake in XRP and didn’t take time to read what we make publicly available every quarter. The increase of circulating supply from Ripple distributions of XRP is actually lower than the increase in circulating supply of BTC, BCH, ETH, etc.”.
So the whole matter is still very much open, and only time will show whether this pessimistic prediction by Mike Novogratz regarding XRP will turn out to be correct or wrong.