Analyst Reveals Only Way To Slow Down XRP ETF

A prominent member of the XRP community has outlined why he expects newly launched XRP exchange-traded funds (ETFs) to source their tokens directly from the open market rather than from Ripple’s escrow supply. His view is rooted in the belief that these funds will need to buy significant volumes of XRP to meet demand, which could increase market pressure and eventually drive prices higher.

Strong Debut For XRP ETFs

The arrival of XRP-based ETFs has already generated substantial interest. The first product, Canary Capital’s XRPC, was launched on November 13 and recorded approximately $245 million in initial inflows. Additional ETFs from Bitwise, Grayscale, and Franklin Templeton have since entered the market.

Data from Sosovalue indicates that the four active XRP ETFs have accumulated a combined net inflow of about $643.92 million over the last two weeks. The most recent daily figure, recorded on November 26, showed another $21.81 million entering the products.

Despite this activity, XRP’s market performance has not risen as sharply as some investors anticipated. Following a 13% intraday increase between November 23 and 24, the asset has faced resistance around the $2.2 range and has remained in a narrow band for several days.

At $2.25, XRP is still down 13% for the month. Even so, some analysts believe that sustained ETF demand could eventually influence price direction.

Analyst Predicts Aggressive Accumulation

Among the most vocal supporters of this outlook is Chad Steingraber, a game developer and long-time XRP commentator. He has repeatedly maintained that the ETFs will attempt to acquire large quantities of XRP during their initial year of operation.

Steingraber argues that the scale of demand these funds are likely to face will require fast and consistent purchasing activity. He estimates that if XRP remains near $2.2, every additional $1 billion flowing into ETFs could represent more than 450 million tokens purchased from the open market.

If the price were to climb to $6, the same inflow would secure far fewer tokens, roughly 166 million. In his view, the market can only accommodate this level of accumulation if XRP rises considerably. He has stated that there is no alternative scenario in which the ETFs can meet demand without upward price movement.

He compares this potential trajectory to the behavior of Bitcoin ETFs in 2024, which saw inflows in ten out of twelve months and accumulated over $35 billion worth of BTC during that period, contributing to price appreciation.

Why Steingraber Rejects Escrow Purchases

Some observers suggest that ETFs could choose to purchase XRP directly from Ripple’s escrow instead of the open market, which would reduce the immediate impact on price. Steingraber disagrees.

He notes that authorized participants (APs) responsible for acquiring tokens for ETF creation are required to secure the underlying assets shortly after receiving new inflows. This process typically occurs within two days, giving APs limited flexibility.

Because XRP from Ripple’s escrow is released on a predetermined monthly schedule, APs would not reliably have access to additional supply at the exact time it is needed.

Steingraber further argues that for ETFs to depend on escrow, Ripple would need to make its entire monthly 1 billion XRP allotment available through Ripple Prime, even if the tokens were not immediately required.

He maintains that it would not be in Ripple’s economic interest to release large volumes at a relatively low price, as doing so would reduce the potential value of its holdings in the future.