‘Astonishing’ XRP Surge Driven by Regulatory Hopes, ETF Speculation: Analysts

As the price of XRP surged to a fresh seven-year high mark Monday, analysts told Decrypt that the asset’s stunning ascent is being driven by a series of post-election factors, ranging from renewed regulatory hopes to the potential for XRP-centric investment products.

Since Election Day last month, the token stewarded by Ripple Labs has been one of the crypto market’s best performers, outpacing Bitcoin and Ethereum’s relative gains. Since November 5, for example, the price of XRP has more than quintupled, rising 430% to $2.67 from $0.50.

Whether it’s WisdomTree or 21Shares, several asset managers have recently filed for products that would give traditional investors exposure to the spot price of XRP. While the development could broaden investors’ access to the cryptocurrency in America, similar products already exist outside the U.S. and have recently notched notable inflows, per CoinShares.

The European fund manager reported Monday that digital asset products for XRP have seen $95 million in inflows over the past week. Representing 67% of total inflows into such products this year, the performance pushed investors’ year-to-date allocations to XRP past $141 million.

CoinShares Head of Research James Butterfill wrote Monday that traders are likely speculating on the approval of an exchange-traded product for XRP, a development in the U.S. that Ripple CEO Brad Garlinghouse described as “inevitable” in October.

“We believe [XRP’s record weekly inflows] is due to hype surrounding the potential for a U.S. ETF,” Butterfill wrote, pointing to last week’s $95 million in allocations to XRP products.

Launched in 2013, XRP is the native asset of Ripple Network, a payments system designed for international money transfers and currency exchanges. Fox Business reported last week that the New York Department of Financial Services is expected to approve a stablecoin issued by the fintech firm on the longstanding network.

While XRP, the token, operates independently of Ripple’s payment and settlement products, Sidney Powell, co-founder and CEO of Maple Finance, told Decrypt that the cryptocurrency is benefiting from Ripple’s “very strong brand recognition” in the crypto space.

“I think it has a lot of legacy value because of the length of time that it’s been around,” Powell said of XRP. “It’s obviously a very well-established cryptocurrency, and Ripple itself is a very well-established business.”

Based in Miami, Powell described a recent Ripple conference as distinct compared to other crypto events he’s attended. At the conference, dubbed Ripple Swell, Powell observed a notable number of institutional participants, ranging from investment to commercial banks, he said.

According to Jake Ostrovskis, an OTC Trader at the market maker Wintermute, XRP’s jump in price over the past week is comparable to Iota and Hedera’s subsequent rise. Within the past seven days, both coins have increased 66% to $0.38 and 116% to $0.29 in value, respectively.

Becoming the third-largest digital asset by market cap this weekend, Ostrovskis attributed XRP’s recent strength to traders navigating the crypto market on their own accord. “The revival of retail shows no signs of slowing,” Ostrovskis wrote in reference to XRP’s jump Monday.

Meanwhile, XRP was the third-most-traded digital asset Monday, only behind Bitcoin and the stablecoin Tether, according to CoinGecko. With over $56 billion in XRP trading hands over the past day, the cryptocurrency had surpassed Ethereum and Dogecoin in terms of volume.

Four years ago, Ripple was sued by the Securities and Exchange Commission (SEC), which accused the firm of violating its rules by allegedly selling $1.3 billion worth of XRP as an unregistered security. Though a federal judge later found that XRP is “not necessarily a security on its face,” the SEC has appealed the ruling.

When SEC Chair Gary Gensler announced that he would resign when President-elect Donald Trump takes office next year, the development was widely viewed as a positive for the crypto industry, which has been subject to an aggressive crackdown under Gensler’s leadership. 

Among digital assets that are expected to benefit from a potential shift in the SEC’s regulatory approach, Nick Cowan, CEO of asset manager VLRM, told Decrypt that XRP’s “astonishing” rally has been driven in part by renewed regulatory hopes.

“XRP has rallied an astonishing 400%, helped most likely by growing sentiment that the SEC’s legal battles may be coming to an end, along with Gensler’s announcement that he’ll be leaving the SEC on January 20th,” Cowan said in a statement.

Edited by Andrew Hayward