With each ETF launch, the crypto market anticipates a price jump. For XRP, backed by Canary Capital's new XRPC fund, the expected effect did not occur. Despite strong opening volume, the price remained frozen before falling 7%. A striking contrast with previous surges caused by similar announcements. Why has XRP, although at the heart of the news, not benefited from this institutional momentum?
In brief
- The launch of the Canary XRPC ETF did not cause the expected rise in XRP, despite $58M in volume on the first day.
- The operation of ETFs, with settlement in T+1, partly explains the lack of immediate reaction on the crypto market.
- Purchases of XRP by the issuer are made deferred, often OTC, limiting their visible impact on the spot price.
- The unfavorable macroeconomic context and the “risk-off” trend of the markets are currently weighing on altcoins, including XRP.
An ETF, but no immediate purchase of XRP
The launch of the Canary XRPC ETF has caused palpable anticipation in the XRP ecosystem, with hopes that this new institutional exposure will propel the crypto higher.
From the first day of trading, the fund recorded a trading volume in excess of $58 million, supported by significant net inflows. However, the price remained almost unchanged. Worse, it fell 7% over the day, thwarting the bullish expectations of many holders.
This lack of reaction can be explained above all by the technical functioning of ETFs, which fundamentally differs from that of the traditional crypto market. Indeed, contrary to what some investors anticipated, the purchase of an ETF does not automatically trigger buying pressure on the token itself. Here is the key points to understand:
- ETFs are traded on stock markets, not crypto exchanges;
- Settlements follow a T+1 cycle, meaning the issuer receives funds the next business day;
- It is only after this period that the issuer can buy XRP, to back the ETF shares with the real asset;
- These purchases of XRP can be made OTC (Over-the-Counter), therefore outside public markets, further reducing their effect on the price;
- The potential impact is therefore delayed, or even diluted over time, instead of being immediate as many assumed.
Thus, the contrast between media buzz and market reality is more due to a lack of awareness of the technical deadlines linked to the structure of ETFs than to an absence of demand or success of the product itself.
Waiting catalysts and delayed prospects
Beyond technical settlement times, other factors explain the stagnation of the price of Ripple's crypto.
The crypto market is currently adopting a mood of caution, meaning investors are avoiding volatile assets, particularly altcoins. XRP has therefore not escaped the overall bearish trend, despite news perceived as positive. This economic reality weighed on the token, annihilating any potential for immediate growth linked to the ETF.
Furthermore, the link between Ripple and the real use of XRP remains partial. Even though the company now has over 300 banking and financial partners, many of them use the network without using XRP itself.
Crypto only comes into play when an institution chooses the On-Demand Liquidity (ODL) product to accelerate its settlements. In other words, increasing institutional adoption does not necessarily imply an increase in demand for XRP. Added to this is a significant circulating supply, often reinforced by sales by large holders during increases, which limits the impact of good news in the short term.
In the medium term, the launch of the ETF could nevertheless play a structuring role if inflows continue over time. Regular entries involve repeated purchases by the issuer. This could, slowly but surely, reduce the available supply of XRP in the markets, creating gradual upward pressure. XRP price has yet to find its catalyst, but the institutional foundations continue to be laid.
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