XRP Market Analysis: ETF Speculation and Institutional Interest

Key Takeaways

• Analysts assign 95% odds for an XRP ETF approval, with regulatory decision expected for October • XRP Ledger adoption remains limited, holding just 2% of Real World Assets despite stablecoin growth • Institutional derivatives activity shows increased professional participation

Price Action and Market Dynamics

XRP faced rejection on Tuesday after reaching its highest level in nearly two weeks at $3.04. The move was driven by speculation around a potential XRP exchange-traded fund (ETF) approval in the United States and increased institutional participation in XRP derivatives, raising expectations about whether XRP might revisit the $3.60 level seen in July.

Institutional Interest Growing

Demand for XRP futures climbed 5% from the previous month, totaling 2.69 billion XRP—equivalent to $7.91 billion at prevailing prices. More notably, the number of outstanding XRP futures contracts at major exchanges jumped 74% during the same 30-day span, reaching 386 million XRP. This increase highlights stronger participation from professional fund managers and market makers.

While higher futures activity generally indicates interest, long and short positions are always balanced. Monthly futures contracts can provide signals of leverage imbalances. Under neutral market conditions, XRP futures typically trade 5% to 10% above spot markets to account for the longer settlement period.

Currently, XRP monthly futures trade at a 7% premium, suggesting leverage demand remains balanced, consistent with the pattern of the past month. One reason for the muted outlook is XRP’s underperformance compared with the broader altcoin market capitalization.

Underperformance Versus Altcoin Market

XRP has remained flat since August, while the altcoin market advanced 14% in the same period. That rally was supported by significant gains across major cryptocurrencies, with some assets posting double-digit percentage increases. XRP’s most notable momentum in August followed the settlement of a years-long dispute between Ripple and the US Securities and Exchange Commission.

ETF Approval Expectations

The anticipation of an XRP ETF approval in the US has been central to XRP’s recent price performance. Industry analysts place the odds of approval at 90% or higher, although the regulatory authority’s final decision is expected only in late October. Alternative product structures combining ETF and ETN features could arrive earlier, following models that do not require direct regulatory approval.

Stablecoin Development

Ripple’s stablecoin RLUSD crossing the $700 million mark in assets has generated attention. While the milestone appears impressive, nearly 90% of the supply was issued on the Ethereum network, creating little to no direct demand for the XRP Ledger. Furthermore, the stablecoin market remains dominated by established issuers with deeper liquidity, presenting formidable competition.

The Reality Check on Adoption

Many XRP supporters believe the XRP Ledger will eventually become the go-to platform for international payments, potentially replacing traditional systems, or become a major player in tokenization. The reality check? Current data shows the XRP Ledger only accounts for 2% of outstanding Real World Assets, and it’s actually being outpaced by some smaller blockchains in this space.

What This Means for You

Could XRP reach $3.60 again? It’s possible, but you should consider that the XRP Ledger currently has only about $100 million in total value locked (TVL), which makes sustaining major rallies challenging.

If you’re invested in XRP, here’s what to watch: the October ETF decision will be crucial, but don’t ignore the underlying fundamentals. For XRP to have sustained success, it needs to show real growth in blockchain adoption and practical utility beyond speculation.

The current situation gives you both opportunities and risks. ETF approval could provide a significant catalyst, and institutional interest is definitely growing. But the ecosystem still needs to prove itself in terms of real-world adoption and utility. Keep these factors in mind when making your investment decisions.