This week marked a significant milestone for XRP, as a dedicated spot XRP exchange-traded fund (ETF) commenced trading in the United States. This launch, celebrated by Ripple CEO Brad Garlinghouse with the enthusiastic remark, “It”s finally happening!”, represents a culmination of years of regulatory efforts.
The new XRP ETF, introduced by Canary Capital, experienced a promising start, garnering nearly $250 million in investments on its first trading day. Analysts had anticipated that this demand could potentially escalate the trading volume to as high as $5 billion within a few months, thereby providing upward momentum for the XRP price.
However, contrary to these expectations, the price of XRP has witnessed a decline of nearly 3% over the last 24 hours. Currently, it remains approximately 37% below its all-time high of $3.65, which was reached in July. Analysts attribute this unexpected turn to a broader downturn affecting the entire cryptocurrency market.
On October 7, the cryptocurrency market had peaked at $4.3 trillion, but this was followed by a sharp reversal. Just days later, on October 10, around $19 billion in leveraged positions were liquidated in a single day. This led to a significant contraction in the market, resulting in nearly $1 trillion being wiped off the total market capitalization, equivalent to one-fifth of all crypto assets, as reported by CoinGecko.
A brief recovery was noted at the start of the week, coinciding with the conclusion of the US government shutdown. Despite this, an $870 million sell-off from Bitcoin ETFs on the same Thursday added further pressure, leading to Bitcoin dropping below $100,000 for the third time this month.
Max Gokhman, vice president of Franklin Templeton Investment Solutions, commented on the situation, stating, “The current sell-off is fully correlated with riskier assets. However, the magnitude of the move is sharper because volatility is higher in the crypto market.” He emphasized that without greater institutional engagement beyond Bitcoin and ETH, the cryptocurrency market will continue to be highly sensitive to macroeconomic risks.
While some market analysts are optimistic about the potential for a rebound, provided there are no additional negative developments, the initial week of the XRP ETF has clearly illustrated how quickly initial launch expectations can be overshadowed by prevailing market conditions.
This scenario serves as a reminder of the volatile nature of cryptocurrencies and the impact of broader market dynamics on individual assets.
