What’s Happening With XRP And Why Did Its Spot ETF Crash 20%?

Overview

XRP has been experiencing sideways trading, which has significantly affected the performance of U.S. spot ETFs that provide exposure to the cryptocurrency. The largest of these ETFs, Canary Capital’s XRP fund, has seen a notable price drop of 20% since its inception, raising concerns about the overall sentiment surrounding XRP and its market dynamics.

XRP’s Sideways Price Action Leads To Spot ETF Crash

The price of XRP has been trading within a narrow range, hovering just above the psychological threshold of $2. This stagnant price action has led to a bearish outlook among investors, with the altcoin showing a decline of over 10% in the month leading up to the launch of Canary Capital’s spot XRP ETF. Since its launch, the fund has experienced a significant crash, dropping 20% in value.

TradingView data indicates that the Canary XRP ETF, which debuted on November 13, has struggled in a challenging market environment. The fund also saw a nearly 10% decline in the prior week due to ongoing volatility in XRP’s price. Compounding these issues, the ETF has faced increased competition from three other spot XRP funds that launched shortly after it, which has likely contributed to a slowdown in its inflows.

The price movement of XRP has closely mirrored that of Bitcoin, as broader market fears suggest a potential bear market may be underway. Furthermore, data from Santiment reveals a decrease in whale transactions, indicating that large holders of XRP may also be adopting a bearish stance. Despite this prevailing negativity, XRP ETFs have managed to maintain a streak of daily net inflows, continuing for 16 consecutive days since the launch of Canary’s fund.

Currently, Canary’s XRP ETF remains the largest in the market, boasting $364 million in assets under management (AuM). In comparison, Grayscale’s GXRP fund holds $211 million, while Bitwise and Franklin Templeton rank third and fourth respectively. Collectively, these XRP funds are approaching a total of $1 billion in assets under management, with a combined total of $861 million.

Positive Trends for XRP

Amid the challenges facing the XRP market, there are some positive indicators. Recent data from Santiment suggests that XRP exchange outflows have been greater than inflows, which is a bullish sign indicating that more investors may be accumulating XRP rather than selling. Typically, higher exchange outflows suggest a trend toward long-term holding, particularly in anticipation of future price increases.

Additionally, the XRP Ledger is currently witnessing a noteworthy trend: although the number of large wallets (those holding 100 million XRP) has decreased by 20.6%, the total amount of XRP held by these wallets has reached a seven-year high of 48 billion coins. This situation indicates that existing large holders are increasing their positions, compensating for the decline in wallet numbers.

From author

The current dynamics surrounding XRP and its associated ETFs illustrate the complexities of the cryptocurrency market. The recent price actions and the competition among ETFs highlight the challenges investors face in navigating these waters. Despite the bearish sentiment reflected in certain metrics, the underlying trends suggest a potential for recovery as long-term holders remain committed to accumulating XRP.

Impact on the crypto market

• The drop in Canary Capital’s XRP fund reflects broader investor sentiment and market volatility.
• Increased competition among spot XRP ETFs may impact future inflows and overall performance.
• The ongoing bearish sentiment among XRP whales could signal caution for new investors.
• Continuous net inflows into XRP ETFs may suggest underlying confidence from long-term investors.
• The trend of decreased large wallet numbers alongside increased holdings indicates a consolidation of assets among committed investors.