Here’s One Sure Way XRP Price Could Go Up

Amid the ongoing discussions surrounding XRP ETFs, we recently evaluated how these products could provide a sure avenue for an XRP price spike.

The XRP community has been sandwiched between bullish and bearish developments over the past few days. On the one hand, the community recently witnessed the launch of the first pure spot XRP ETF from Canary Capital. However, on the other hand, the price has not reflected the move, especially considering the ETF’s success.

Canary Capital XRP ETF Sees Initial Success

Specifically, the Canary Capital XRP ETF (XRPC) saw about $245 million worth of inflows on its debut, outpacing the BlackRock iShares Bitcoin ETF (IBIT), which observed $111.6 million on its first trading day last January. However, on the second day, XRPC’s flows cooled, but remained positive at around $27 million.

After two trading days, XRPC has already locked up 120.69 million XRP worth $275 million despite coming from an asset manager with less renown and AUM than other heavyweights like Grayscale, Franklin Templeton, and Bitwise. As a result, multiple XRP proponents believe these other products could scoop up more XRP tokens when they launch.

Specifically, besides the Canary Capital fund, six more spot XRP ETF filings lie on the SEC’s desk. These include filings from Bitwise, Grayscale, Franklin Templeton, 21Shares, CoinShares, and WisdomTree. Issuers like Grayscale and Bitwise have amended their S-1s to launch later this month.

A Projected $800M Monthly Inflow

Amid the anticipation, we recently assessed how much impact they would make on the XRP price if these six products became successful, not just on their first trading days. Specifically, if all seven products, including XRPC, bring in $800 million every month for a year, they would purchase $9.6 billion worth of XRP within this period.

For perspective, the $800 million figure is only about 2.9x higher than XRPC’s two-day inflow of $275 million. Considering six more products would have to combine their inflows to bring in this figure across 20 trading days, it looks highly possible. However, it is not a guarantee.

Interestingly, the projected $9.6 billion inflow still represents a lower value than the $10 billion Canary Capital CEO Steven McClurg predicted for the first month of inflows. However, if the projection materializes, the impact on XRP price could be massive.

Notably, capital inflows do not impact an asset’s market cap at a 1:1 ratio, often leading to higher spikes in valuation in what most analysts call the market cap multiplier. For instance, market watcher Dom spotlighted a 272x multiplier in May, with $61 million worth of capital inflows adding $16.6 billion to the market cap.

One Sure Way XRP Price Could Rise

However, for this assessment, we consider a more modest 100x multiplier. With this, the $9.6 billion inflow could lead to an additional valuation of $960 billion for XRP. Currently, XRP has a market cap of $136 billion, with the addition of $960 billion leading to a potential valuation of $1.095 trillion. 

Considering XRP’s circulating supply of 60 billion tokens, this translates to a price of around $18.3 for XRP, representing a 720% increase from the current price of $2.23. Interestingly, as far back as October 2023, when XRP traded for $0.51, analyst Dark Defender predicted a possible XRP price rally to $18 depending on how its Elliott Wave structure unfolds.

This assessment shows that XRP ETFs remain one of the avenues through which XRP could reach higher prices, much like the impact of Bitcoin ETFs. However, just like the reaction from Bitcoin’s price in early 2024, the XRP price seems to be seeing initial dips. Notably, such price impact rarely emerges immediately due to how ETF structures work.