XRP Price Continues Decline Despite $410 Million in ETF Inflows

TLDR

• The launch of spot XRP ETFs generated strong institutional inflows totaling $410 million.
• Despite the inflows, XRP’s price has fallen by 13.16% over the past week.
• XRPC ETF raised $305.4 million in cumulative inflows within its first five days.
• Bitwise XRP ETF attracted $105.36 million on its debut day.
• XRP price dropped below the critical $2 support level, trading at $1.98.

The launch of spot XRP ETFs, including the Canary Capital XRP ETF (XRPC) and Bitwise XRP ETF, generated excitement among investors. XRPC received an impressive $245 million in its debut inflows and continued to attract demand. However, despite these strong institutional inflows, the price of XRP has declined, falling below the $2 psychological support level.

XRPC ETF Sees Strong Debut with $305 Million in Inflows

The Canary Capital XRP ETF (XRPC) saw a strong debut, attracting $245 million in its initial launch. Over the following days, the ETF maintained steady demand, reaching $292 million in inflows by day four. On day five, XRPC added $12.8 million, bringing its cumulative total to $305.4 million.

Despite this strong performance, the price of XRP did not rise in tandem. XRP continues to fall in line with the broader crypto market, losing 13.16% over the past week. The cryptocurrency recently slipped below the $2 support level and is currently trading at $1.98.

On the same day as XRPC’s strong performance, the Bitwise XRP ETF officially launched. The new ETF attracted $105.36 million in its first day, adding to the total inflows across all spot XRP ETFs. Combined, both the XRPC and Bitwise ETFs have generated $410.76 million in inflows.

However, the XRP price has continued its decline despite these inflows. Many investors had hoped the ETFs would provide upward momentum for XRP, but the market has not responded as expected. The XRP price remains under pressure, reflecting broader market trends.

XRP Price Movement Tied to ETF Creation

VanQish, a community member, provided insights into how XRP ETFs work and why they don’t directly move XRP prices. He explained that an ETF adjusts its XRP holdings based on demand for its shares, rather than on a fixed schedule of buying or selling. The creation and redemption of ETF shares by authorized participants are what influence the fund’s XRP holdings.

He clarified that when authorized participants create new shares, they deliver XRP or cash to the ETF. This process increases the fund’s holdings of XRP. Conversely, when participants redeem shares, the fund’s XRP holdings are reduced.

VanQish also emphasized that trading on the secondary market does not impact the actual supply of XRP. When ETF shares are traded, ownership is exchanged, but the underlying XRP only changes hands when authorized participants create or redeem shares.

This mechanism helps maintain market efficiency. It also prevents retail traders from directly influencing the supply of XRP within the ETF. As VanQish explained, an accurate price movement will only occur when authorized participants face difficulty finding XRP to meet creation demand.

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