Key Takeaways
- XRP, Solana, and DOGE are leading candidates for the US spot ETF SEC approval process, but XRP could launch earlier.
- XRP has higher liquidity than the other assets, and its US market share continues to grow, and Solana’s is declining.
- Despite the market’s cautious optimism, Teucrium’s launch of a 2x XRP ETF has boosted the token’s momentum.
Superior market liquidity and Teucrium’s recent launch of a 2x leveraged product could position the anticipated spot XRP ETF for SEC approval ahead of competitors Solana (SOL) and Dogecoin (DOGE).
According to a report by crypto research and data platform Kaiko regarding spot exchange-traded fund (ETF) approval by the US Securities and Exchange Commission, Ripple Labs’ affiliated token leads all other altcoins by the number of ETF filings. XRP has at least 10 different filings, followed by Solana, which is in second place, with filings by five ETF issuers.
XRP’s US spot Market Share has Surged
Compared to Bitcoin, whose spot ETF approval by the SEC followed Grayscale’s legal victory, highlighting the regulator’s inconsistency on the futures and spot markets under Gary Gensler’s stewardship, XRP operates in a different way. The Ripple-affiliated token doesn’t run a robust futures market, while its trading volume is mainly offshore. XRP’s US spot market share has recently surged since the SEC’s 2021 lawsuit triggered delistings. On the other hand, SOL’s US market share has slipped to 16% from a 2022 peak of 25–30% over the same period.
The launch of a 2x XRP ETF by Teucrium, a US asset manager that mainly tracks European ETPs and swap agreements, has further skyrocketed the spot XRP ETF’s chances for SEC approval. The firm aims to deliver twice XRP’s daily returns. Teucrium Investment Advisors launched a 2x leveraged XRP ETF earlier this month.
May 22: The Next Important Date
Onchain data shows that the asset manager garnered over $5 million in volumes on debut day to become the provider’s “most successful launch.” As per the report from Kaiko:
“This underlying market’s improving dynamics and the launch of a 2x XRP ETF last week position XRP ahead of other assets when it comes to approval […] although some tokens, such as LTC, which have very similar consensus mechanisms to BTC and share similarities to commodities, could also have a clear path to approval.”
According to the Kaiko analytical report, May 22 is the next important date to watch, as the SEC must respond to Grayscale’s spot XRP filing by then. The report says:
“Since [Teucrium’s] leveraged ETF relies on returns from European ETPs and swap agreements to guarantee twice the daily returns of XRP, it’s hard to see how a spot product is more risky and therefore diminishes most arguments for denying these applications.”
Some Cautious Optimism
Surprisingly, with all the positive factors giving the spot XRP ETF SEC approval an advantage over the competition, Deribit’s options market advices for some cautious optimism, highlighting a bearish sentiment relating to implied volatility for April 18 expirations, signaling demand for downside protection. However, Kaiko’s Adam Morgan McCarthy had this to say:
“It’s hard to argue against allowing a spot product when there’s already an active ETF like this, which is highly levered and more risky than a vanilla spot ETF.”
Conclusion
Records from the federal agency show an increasing number of firms awaiting spot XRP ETF SEC approval. This includes Bitwise, Grayscale, 21Shares, CoinShares, and Canary Capital, which have all reportedly applied to list spot XRP funds. The applications for spot XRP ETFs join others for ETPs based on Solana, Litecoin, Cardano, and Dogecoin, among other tokens, reflecting a growing demand for crypto investment products. The Kaiko report predicts that after the XRP ETF, the Solana-based fund would be the most likely candidate to receive the green light.
Frequently Asked Questions (FAQs)
What is an ETF in crypto?
Cryptocurrency exchange-traded funds (ETFs) track the price performance of digital assets by investing in a portfolio linked to their instruments. Like other funds, crypto ETFs trade on regular stock exchanges where investors can hold them in their standard brokerage accounts.
What is a spot ETF in crypto?
Spot crypto ETFs reflect digital assets’ real-time market price and are continuously rebalanced by buying and selling tokens. This exposes investors to the same price movements as typical crypto exchange traders without holding the asset directly.
How do ETFs work?
The fund provider in an ETF owns the underlying assets, designs a fund to track their performance, and then sells shares in that fund to investors. While the shareholders don’t own the underlying asset in the fund, every one of them owns a portion of the ETF.
