Oct 16, 2024

6thTrade

XRP ETF on the Horizon: Investors Eye the Next Big Crypto Investment Opportunity

The introduction of cryptocurrency-based exchange-traded funds (ETFs) in the United States has brought a new wave of excitement to the market, and now investors are eagerly anticipating the next big digital asset trading product. Among the most talked-about possibilities? An XRP ETF.

During Ripple Swell 2024, Tim McCourt, Senior Managing Director at CME Group, discussed the growing potential for an XRP ETF. “We do have an XRP reference rate and a real-time index, which is a first step in building out this ecosystem,” McCourt said. With over 50 real-time prices and reference rates, the groundwork is already being laid for product providers, like Bitwise, to move forward with regulated benchmarks.

McCourt’s remarks come at a pivotal moment. Canary Capital recently became the second provider to submit an application for an XRP ETF, following Bitwise Asset Management’s lead. According to Bloomberg ETF analyst Eric Balchunas, the race for an XRP ETF is heating up, with these applications signaling a major step toward making XRP a key player in the ETF space.

ETFs: A Catalyst for Crypto Growth

The enthusiasm surrounding a potential XRP ETF isn’t just talk. ETFs have proven to be powerful catalysts for cryptocurrency growth. Bitcoin’s recent surge to over $50,000 was largely fueled by the introduction of spot ETFs, which accounted for roughly 75% of new investments in the cryptocurrency by mid-February. An XRP ETF could have a similar impact, driving investor interest and pushing the token’s price upward.

Despite the wider rally in the crypto market, XRP’s price has been relatively modest, rising just over 8% over the past year compared to Bitcoin’s 154% jump. However, as history has shown with Bitcoin, the approval of an ETF could significantly bolster XRP’s price, providing the momentum it has been lacking.

XRP or Solana ETF: Who Will Lead the Charge?

The excitement doesn’t stop with XRP. Investors are also buzzing about the potential for a Solana (SOL) ETF. Brazil recently approved the country’s first Solana ETF, creating a blueprint for other jurisdictions to follow. While the approval of a US-based spot Solana ETF remains uncertain, many industry insiders believe that such a move could act as a powerful price catalyst for SOL. Alejo Pinto, founder of Solana layer-2 network Lumio, suggests that the low probability of approval means the price impact could be even greater if the ETF is approved.

Manthan Dave, co-founder of Palisade, a Ripple-backed digital asset custody platform, is optimistic that we could see a Solana ETF approved by the end of 2024. Such a development would mark another major milestone in the evolution of the crypto sector, further legitimizing Solana as a key player in the digital asset space.

Grayscale’s Bold Move: Converting Large-Cap Fund into an ETF

Adding to the excitement is Grayscale’s recent filing with the Securities and Exchange Commission (SEC) to convert its Digital Large Cap Fund (GDLC) into a spot ETF. This fund, which includes XRP alongside Bitcoin, Ethereum, Solana, and Avalanche, currently has $534 million in assets under management. While it currently trades over the counter as a closed-end fund, converting it into an ETF would bring significant benefits, including increased liquidity, transparency, and access for investors.

If approved, Grayscale’s ETF could open the door for more institutional investors to participate in the crypto market, further accelerating growth in the sector. ETFs are more tightly regulated than closed-end funds, and their approval would provide a level of legitimacy that could attract larger players to the space.

Ripple vs. SEC: The Battle for XRP’s Future

Including XRP in Grayscale’s filing has raised the stakes in the ongoing legal battle between Ripple and the SEC. As the regulatory body weighs the approval of XRP ETFs, it will also need to address the unresolved legal status of the token. Bitwise made headlines by becoming the first to file for a spot XRP ETF, and Canary Capital has now joined the race. These filings, along with Grayscale’s efforts, are putting pressure on the SEC to take a definitive stance on XRP.

The debut of the first Bitcoin and Ether ETFs marked a turning point for the cryptocurrency industry, providing a much-needed boost to the sector. As Tim McCourt noted, ETFs have significantly accelerated industry growth: “I don’t think it’s accidental that some of our largest open interest days and volume-based futures have happened after the advent of the ETFs because this ecosystem is really accelerating.”

The Future Looks Bright for XRP and Solana ETFs

As we look ahead, the introduction of an XRP or Solana ETF could mark the next major milestone in the crypto world. With institutional interest growing and regulatory hurdles slowly being cleared, the future looks bright for these digital assets. Whether XRP or Solana takes the lead, one thing is clear: ETFs are reshaping the landscape of cryptocurrency investing, and savvy investors are positioning themselves to capitalize on the next big opportunity.

Credit Image : Tradingview


Disclaimer: The content of this article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments are highly volatile and may lead to substantial financial loss. Always perform your own research and consult a qualified financial advisor before making any investment decisions. The opinions expressed are solely those of the author and do not represent the views of the publisher or its affiliates. Investing in cryptocurrencies involves inherent risks, and past performance is not a reliable indicator of future results. Please exercise caution.

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