A recent report from Messari, a crypto research firm has suggested that Ripple’s XRP circulating market cap is “significantly overstated” claiming that about 48% or $6.1 Billion worth of XRP is not actually in circulation and therefore not a valid metric as part of the market cap.
According to Messari, ripple’s circulating market cap is $6.9 billion, which would make it the third-largest cryptocurrency behind both bitcoin ($62.9 billion) and ethereum ($12.2 billion).
Messari states that:
“In addition to the 59 billion XRP held on Ripple’s balance sheet… there could be significant, persistent sell-side pressure in the XRP market depending on the length and structure of selling restrictions placed on Ripple’s market-making partners, a Ripple affiliated foundation, and Ripple’s co-founders, all of which appear to have negotiated rate limits for sales based on exchange trading volume of XRP.”
Messari alleges that the Ripple company which is closely associated with and owns the majority of XRP does not provide accurate market information through its XRP data API.
However, Ripple has claimed that their market cap is, in fact, much higher than reported on most market data sites.
Ripple spokesperson alleged that Messari based the report on “several inaccurate assumptions” as well as “an incorrect calculation of market cap.”
Not only does this report contain several inaccurate assumptions around lockups and selling restrictions, but the entire report is also based on an incorrect calculation of market cap. While decentralized digital assets like XRP are different from traditional equities, the term ‘market cap’ is always a very simple calculation: current price X total number of the asset = market capitalization. That puts XRP’s current market cap at approximately $31 billion. We believe that any other calculation of market capitalization for XRP is not a clear representation of the truth.
The report notes that it is impossible to make exact estimates without disclosure from Ripple, which it had not received by the time of publication. Messari also states that Ripple did not disclose the methodology or reference exchange data that it uses to calculate the XRP trading volume.