XRP Rally To $3.60 Must Include More Than ETF Approval

Key takeaways:

Bloomberg analysts assign 95% odds for an XRP ETF, with a SEC decision expected for October.

XRPL adoption lags peers, holding just 2% of Real World Assets despite stablecoin growth.

XRP (XRP) price 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.

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 listed at the Chicago Mercantile Exchange (CME) jumped 74% during the same 30-day span, reaching 386 million XRP. The 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. Still, 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.

XRP has remained flat since August, while the altcoin market advanced 14% in the same period. That rally was supported by gains of 32% in Hyperliquid (HYPE), 28% in Solana’s SOL (SOL), 19% in Cardano’s ADA (ADA), and 18% in Ether (ETH). XRP’s most notable momentum in August followed the settlement of a years-long dispute between Ripple and the US Securities and Exchange Commission (SEC).

XRP rally hinges on looming US ETF decision

The anticipation of an XRP ETF approval in the US has been central to XRP’s recent price performance. Bloomberg analysts place the odds of approval at 90% or higher, although the SEC’s final decision is expected only in late October. REX-Osprey products combining ETF and ETN structures could arrive earlier, following a model similar to Solana Staking (SSK), which does not require direct SEC approval.

Ripple’s stablecoin RLUSD crossing the $700 million mark in assets also 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, including Circle’s USYC and World Liberty’s USD1, which present formidable competition.

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Some investors expect XRPL to evolve into a primary facilitator of international payments, effectively replacing the current SWIFT infrastructure, or to rapidly expand its role in tokenization. However, data from RWA.xyz indicates XRPL accounts for only 2% of outstanding Real World Assets, trailing smaller blockchains such as Avalanche, Stellar, and Aptos.

XRP’s advance to $3.60 cannot be ruled out, but considering XRPL’s modest $100 million in total value locked (TVL), the odds of sustaining such momentum appear limited.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.