If the XRP ETF is approved, who will buy it and how will liquidity change?

There are currently six XRP ETF funds awaiting approval from the Securities and Exchange Commission of America (SEC), with the final deadlines in October. Their emergence is expected to restructure the XRP market.

The legal context took an important turn on September 17, when the SEC approved common listing standards for cryptocurrency-related ETFs on major exchanges. According to Eric Balchunas, a senior ETF analyst at Bloomberg, the SEC's approval of altcoin ETFs "is no longer a matter of whether it will happen, but when it will happen."

However, the approval timeline still depends on Washington. During the federal government shutdown, the SEC only operates with a minimal team and suspends processing registration filings, causing ETF launches to be delayed. When personnel return, the approval order can be reassessed, thus the possibility of approval in October still exists.

Based on this context, Bitwise, 21Shares, WisdomTree, Canary Capital, CoinShares, and Grayscale are predicted to launch XRP products on the Cboe exchange this month, thereby restructuring the XRP market.

Expected cash flow

The amount of money flowing into the XRP ETF is a topic of debate, but some estimates have been provided. Market researchers predict that the inflow in the first year could reach 8 billion USD. Julio Moreno from CryptoQuant estimates that the ETF could absorb 1%–4% of the total circulating supply of XRP.

Jamie Elkaleh from Bitget believes that the $4–8 billion range is a realistic base scenario. JPMorgan's framework from January, based on the penetration rates of Bitcoin and Ethereum, predicts that 3%–6% of market capitalization will be converted into ETF cash flow.

With the price of XRP around 3 USD at the time of writing, the cash flow in the first year is estimated to be around 5.5–11 billion USD.

In the competition for capital, low fees and a broad distribution strategy will be the determining factors. History shows that lower costs and access to multiple brokerage platforms often bring in strong cash flow in the early stages.

Regarding the investor position, the initial capital flow is likely to come from individual investors if XRP wants to mimic the movements of the Bitcoin spot ETF. A study by K33 in February found that 25.4% of the assets under management of the Bitcoin spot ETF belong to institutions.

Price Movement and Supply Trends

The price of XRP on the day of the ETF launch may fluctuate complexly. Previously, the Bitcoin spot ETF in America caused BTC to drop by 7.5% on the launch day ( "sell the news" ), even threatening to lose the 40,000 USD threshold. The Ethereum ETF also dropped by 4.25% the following day.

In the medium term, BTC quickly rose to nearly 74,000 USD after two months, while Ethereum continued to decline until early October. The difference is that BTC launched during a period of overall market growth, while Ethereum launched during a strong correction period. Therefore, it is difficult to predict XRP price volatility, but the possibility of "sell the news" is present.

What is almost certain to change is the structure of the XRP market. A report from Glassnode indicates that the spot ETF in America plays the role of "sucking supply" for Bitcoin and Ethereum, removing coins from the circulating supply. When the demand for ETFs decreases, the vulnerability of the market increases; conversely, the return of capital helps stabilize prices due to tightened supply.

An XRP ETF system will operate similarly, with a steady cash flow absorbing supply, directing price discovery according to the allocation rate from advisors and individual investors, reducing sensitivity to pure crypto liquidity cycles.

With the new ETF regulations having been issued and the application being processed, the core question for XRP is no longer whether it will be approved, but how the first wave of capital inflow will shape the market dynamics of XRP.

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