XRP (XRP -0.25%) is gaining on Friday. From 4 p.m. ET yesterday, the cryptocurrency is up 5.1% as of 3:52 p.m. ET. The move comes as Bitcoin was mostly flat.
Ripple, the company behind XRP, announced a major acquisition that could help boost XRP demand.
Ripple is betting on stablecoins
Ripple announced yesterday that it has agreed to purchase Rail, a stablecoin platform, for $200 million. Ripple says that the acquisition will deliver the "most comprehensive stable coin payment solution on the market."
Ripple is trying to take advantage of the excitement around stablecoin adoption. With the recent passage of the Genius Act, stablecoins could become a substantial part of the traditional financial system.
Image source: Getty Images.
Ripple President Monica Long said in a statement that with the acquisition, "Ripple was uniquely positioned to drive the next phase of innovation and adoption of stablecoins and blockchain and global payments."
While investors appeared to believe the acquisition would lead to increased adoption of XRP itself, it's not clear yet how much this will hold true.
XRP could be overvalued
It's possible that, like other aspects of Ripple's business, Rail won't directly translate to XRP adoption.
I continue to have doubts about its valuation. To be sure, XRP is a crypto with real-world utility already in widespread use -- and in a world of meme coins that is worth something -- but I'm not sure its current market cap of nearly $200 billion makes sense.
