Six spot XRP exchange-traded funds (ETFs) are currently awaiting approval from the Securities and Exchange Commission (SEC) in the United States. These ETFs have final deadlines set for October and have the potential to significantly impact market conditions once they are launched.
The regulatory landscape for crypto-related ETFs shifted on September 17 when the SEC approved generic listing standards for such products on major exchanges. Bloomberg senior ETF analyst Eric Balchunas mentioned on September 29 that the approval of altcoin ETFs is not a question of “if” but “when.”
However, the timeline for approval still depends on the operations in Washington. With the SEC operating with limited staff during the federal shutdown, the processing of registration statements for ETFs is on hold until funding resumes. Once the staff return, the effectiveness orders can be reevaluated, making an October approval a possibility.
It is anticipated that Bitwise, 21Shares, WisdomTree, Canary Capital, CoinShares, and Grayscale will launch their XRP products on Cboe this month, which will lead to a restructuring of the XRP market.
The potential amount of money that could flow into these XRP ETFs is a topic of debate. Market researchers have suggested that first-year inflows could reach up to $8 billion, with estimates ranging from 1% to 6% of the circulating supply being absorbed by the ETFs. This could translate to significant net creations ranging from $5.5 billion to $11 billion based on XRP’s current price of $3.05.
When it comes to investor positioning, retail investors are expected to dominate the initial inflows, mirroring the trends seen with spot Bitcoin ETFs. Fee competition and distribution strategies will play a crucial role in capturing capital flows in this competitive market.
The launch day price action of these XRP ETFs will be closely watched, with past events showing a tendency for a “sell the news” scenario. However, the structural impact of these ETFs on the XRP market cannot be overlooked. Similar to Bitcoin and Ethereum ETFs, XRP ETFs can become a supply absorber, impacting the coin’s liquidity and price discovery.
With the regulatory framework in place and the anticipation surrounding the approval of XRP ETFs, the focus now shifts to how the influx of capital will reshape the dynamics of the XRP market. Stay tuned for updates on the potential launch and impact of these XRP ETFs.