XRP ETF Could Struggle Against Bitcoin, Ethereum

What to Know:

• XRP ETFs have launched with significant inflows, outperforming initial launches of Bitcoin and Ethereum ETFs.
• Despite strong inflows, XRP’s price has not yet reflected this positive momentum, trading below its ETF debut price.
• The market’s reaction highlights the complex interplay between ETF inflows, broader market sentiment, and asset-specific dynamics.

The launch of XRP ETFs marks a significant milestone for the digital asset, bringing it further into the fold of traditional financial products. This development occurs amidst ongoing regulatory discussions and a maturing digital asset market structure, potentially opening XRP to a wider range of institutional and retail investors. For active traders and institutions, the performance of these ETFs and their impact on XRP’s price present both opportunities and challenges.

Following months of anticipation, the first XRP ETF launched on November 13, joining Bitcoin and Ethereum in having its own exchange-traded fund. In its initial weeks, XRP ETFs have seen substantial inflows, close to $900 million, and have not experienced a single day of net outflows. Canary Capital’s XRPC broke the 2025 record for the highest trading volume on day one. This strong initial performance suggests a robust appetite for XRP exposure through traditional investment vehicles.

The debut of Bitcoin ETFs earlier in the year provides a useful comparison. After a decade of SEC rejections, the approval of spot Bitcoin ETFs in early 2024 led to an initial “sell-the-news” event, with Bitcoin’s price dropping from $48,000 to below $40,000. However, this correction was short-lived. Fueled by impressive ETF inflows, Bitcoin surged to new all-time highs within two months, reaching over $73,000. Excluding Grayscale’s converted trust (GBTC), most Bitcoin ETFs gained traction, with cumulative net inflows exceeding $1 billion by March 12. Overall, Bitcoin ETFs have accumulated over $57 billion in net inflows, and BTC trades nearly 2x its price on the ETF debut day.

Ethereum’s ETF launch, while also experiencing an initial price drop from $3,600 to under $2,200, faced a more challenging path. Unlike Bitcoin, Ethereum ETFs struggled to maintain positive inflows for several months, overshadowed by Grayscale withdrawals. It wasn’t until the end of 2024 that Ethereum ETFs saw a significant inflow streak, corresponding with a price surge from under $2,500 to over $4,000 in December 2024. Since then, the ETH ETFs have been mostly stable and positive. Currently, Ethereum’s price remains below its valuation on July 23, 2024.

Despite the strong inflows into XRP ETFs, XRP’s price has not yet mirrored the success seen with Bitcoin. XRP experienced a price decline on November 13, dropping from over $2.50 to under $2.30, and has struggled to stage a significant recovery. While it rebounded from a multi-month low of $1.83 on November 21, it currently trades at $2.03, below its price on the ETF debut day. This divergence between ETF inflows and price action highlights the complex dynamics at play in the digital asset market.

Several factors could explain this discrepancy. First, broader market sentiment and macroeconomic conditions play a crucial role. If overall risk appetite is low, even positive news like ETF inflows may not be enough to drive prices higher. Second, XRP’s specific regulatory challenges and legal uncertainties may be weighing on investor sentiment. The ongoing lawsuit involving Ripple Labs and the SEC continues to cast a shadow over XRP, potentially deterring some institutional investors.

The performance of XRP ETFs in their early days is a bullish sign, particularly when compared to the initial launches of Bitcoin and Ethereum ETFs. However, the lack of immediate price appreciation underscores the need for a nuanced understanding of market dynamics. For institutional investors, XRP ETFs offer a new avenue for exposure to this digital asset, but careful consideration of regulatory risks and market conditions is essential.

In conclusion, the launch of XRP ETFs represents a significant step forward for the digital asset market. While the initial inflows are encouraging, the muted price response highlights the complexities and challenges that remain. As the market matures and regulatory clarity improves, XRP ETFs have the potential to play a more significant role in the broader financial landscape.

Related: XRP Faces Downside Risk This Week

Source: Original article