What to Know:
- XRP ETFs could significantly impact XRP’s price by reducing the circulating supply.
- The inflow-to-valuation multiplier effect is crucial for estimating the potential price surge.
- Realistic projections, assuming a moderate multiplier, suggest a substantial increase in XRP’s value.
The potential launch of XRP ETFs is generating considerable excitement, prompting analysts to estimate the possible impact on XRP’s price. Recent discussions have focused on how these ETFs could affect XRP’s market dynamics, especially if they absorb a significant portion of the available supply. The approval of Solana ETFs has further fueled speculation and anticipation within the crypto community.
If XRP ETFs were to acquire 5% of the total XRP supply, roughly 4.95 billion XRP would be removed from the open market. At a current XRP price of around $2.20, this would represent approximately $12.3 billion worth of tokens. The resulting supply squeeze could lead to a notable shift in market dynamics.
However, the inflow-to-valuation multiplier effect suggests that a $12.3 billion capital inflow wouldn’t directly translate to an equal increase in XRP’s market capitalization. This multiplier, which can vary between 50x and 300x, depends on market conditions and liquidity during the capital inflow. Historical data indicates XRP has seen multipliers as high as 300x.
Assuming a moderate multiplier of 70x, a $12.3 billion inflow from XRP ETFs could increase XRP’s market cap by $861 billion. Considering XRP’s current valuation of $150 billion, this would result in a new market cap of $1.011 trillion. Given the circulating supply of approximately 60 billion tokens, this could lead to a price of $16.85 per XRP, representing a 574% increase from its current level.
In conclusion, the introduction of XRP ETFs holds the potential to significantly influence XRP’s market dynamics and price. By absorbing a portion of the circulating supply and considering the inflow-to-valuation multiplier effect, analysts project a substantial increase in XRP’s value, although the actual impact will depend on various market factors and the specific conditions surrounding the ETF launch.
Source: Original article
