What to Know:
- ETF trading happens on the stock market, not crypto exchanges, impacting immediate price action.
- Bearish market conditions and large token supplies can dampen the effects of ETF inflows on XRP.
- Over-the-counter (OTC) purchases by ETFs may obscure the real buying activity’s impact on XRP’s price.
The launch of the Canary Capital XRP ETF (XRPC) sparked considerable discussion within the XRP community when the price of XRP failed to rally immediately. Fabio Marzella, a Founding and Board Director of the XRPL Foundation, has offered insights into why the anticipated price surge didn’t materialize right away. His explanation focuses on the mechanics of ETF settlements and broader market dynamics.
Marzella explained that ETF trades occur on the stock market, not on crypto exchanges, meaning that the settlement process takes time before impacting spot prices. Due to the T+1 settlement system, the ETF issuer only receives the cash the next business day and can then begin purchasing XRP. This delay means that initial inflows don’t immediately translate into spot market demand.
The overall bearish sentiment in the crypto market has also played a significant role in tempering the ETF’s impact on XRP. Bitcoin’s pullback from the $100,000 mark has dragged down the rest of the market, including major altcoins like Shiba Inu (SHIB). Selling pressure from major XRP holders can further offset any upward momentum from ETF inflows.
Another factor influencing the price is how ETFs acquire their assets; large funds like Canary Capital often source assets from over-the-counter (OTC) liquidity providers. These OTC purchases are not visible on public exchanges, obscuring the actual buying activity. This means the true demand and impact of the ETF might not be immediately apparent in XRP’s spot price.
XRP correction is normal, the entire crypto market is in a cool off period after a strong bull run. Bitcoin is down 10% this week. #XRP is still up 150% this year.
While the immediate price reaction to the XRP ETF launch may not have met expectations, the underlying dynamics suggest a delayed, rather than absent, impact. Investors should remain patient and consider the broader market context, as well as the mechanics of ETF operations, when assessing the long-term effects on XRP’s price. As with Bitcoin ETFs, the real impact may unfold gradually.
Source: Original article
