What to Know:
- Institutional interest in XRP ETFs could rapidly consume the available XRP supply, potentially leading to a supply shock.
- Analyst models project billions in ETF inflows, but the price impact may be delayed due to OTC trading and settlement cycles.
- Despite muted price response so far, the long-term outlook for XRP remains bullish as ETFs accumulate supply.
XRP is gaining increased attention as analysts project that institutional inflows into spot ETFs could significantly impact its circulating supply. One model suggests that multiple XRP ETFs could collectively absorb a substantial portion of the available XRP within a year. This potential demand surge has sparked discussions about a possible supply shock and its implications for XRP’s price.
Steingraber’s analysis models a scenario where a single XRP ETF sees an average of $90 million in daily inflows. Extrapolating this across 12 ETFs results in over $1 billion daily, potentially requiring the purchase of hundreds of millions of XRP. Should these inflows persist, ETFs could accumulate billions of XRP within months, drastically reducing the public supply.
Institutions will have to start buying XRP to fill the ETFs.
This will create buying pressure.
The price will go up.
And the bull run will start.
— JackTheRippler© (@RippleXrpie) November 27, 2023
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Canary Capital’s XRPC ETF has already seen substantial inflows, and Franklin Templeton’s EZRP ETF is expected to draw significant investment upon launch. The anticipation of additional ETFs from major players like Bitwise and Grayscale further fuels expectations of increased demand. These developments signal growing institutional confidence in XRP and its potential as a viable investment asset.
Despite the bullish outlook, XRP’s price has not yet reflected the anticipated impact of ETF launches. Experts point to the fact that ETF trades occur on stock exchanges, and the settlement cycle delays the immediate impact on the spot market. Furthermore, issuers often acquire XRP through over-the-counter (OTC) transactions, which are less visible and have a delayed effect on public prices.
In conclusion, while the immediate price impact of XRP ETFs may be muted, the potential for significant supply absorption remains a compelling narrative. As institutional interest grows and ETFs continue to accumulate XRP, the long-term outlook for XRP remains positive, suggesting a potential shift in market dynamics.
Source: Original article
