Expert Explains Why XRP Is Down After Launch of First ETF

The launch of the Canary Capital XRP ETF (XRPC) generated strong expectations across the XRP community, with many anticipating a significant price increase once the product went live.

Although the ETF delivered one of the most notable launches of 2025, recording substantial inflows and high early trading activity, XRP’s market performance did not follow the optimistic predictions. Instead, the token continued to trend downward.

Fabio Marzella, Founding and Board Director of the XRPL Foundation, has offered a detailed explanation addressing the gap between ETF enthusiasm and the token’s recent price behaviour.

ETF Transactions Do Not Immediately Influence Spot XRP Markets

Marzella emphasised that the core misunderstanding lies in how ETF settlement works. He noted that trading of ETF shares takes place within traditional stock market infrastructure rather than on cryptocurrency exchanges where spot XRP is traded. Because of this separation, transactions involving the ETF do not instantly translate into purchases of underlying XRP.

He further explained that ETF settlement follows a T+1 cycle. When an investor buys shares of XRPC, the issuer receives the cash the following business day, not at the moment of trade execution. Only after the settlement is completed can the issuer begin acquiring XRP to match fund inflows.

As a result, initial activity surrounding the ETF’s launch does not immediately affect the spot market. According to Marzella, the actual buying of XRP occurs after this delay, meaning price effects tend to appear later rather than on the first day of trading.

Strong Launch Metrics but Limited Immediate Price Support

Despite the lag in settlement effects, XRPC’s market debut was considerably strong. The ETF generated $26 million in trading volume within its first half hour and closed the day with $58.5 million in total volume.

Net inflows reached approximately $245 million, positioning the fund as the most successful ETF introduction of the year. It also ranked among the highest-performing ETF launches out of more than 900 issued in 2025.

Even with these favourable statistics, XRP moved downward. The token declined from $2.52 to about $2.28 shortly after the ETF launch. Over the following days, it dropped as low as $2.16 before recovering slightly to around $2.13 at the time of writing. This placed the weekly decrease at roughly 16.45%.

Broader Market Conditions Undermined ETF Momentum

Marzella identified overall market weakness as another major influence. Bitcoin fell below $100,000 last week and continued to decline to around $92,900. This broader downturn put widespread pressure on the cryptocurrency sector, affecting altcoins such as XRP regardless of ETF-related developments.

Industry commentators have also noted that even large inflows are often insufficient to offset heavy selling during periods of market stress. Given XRP’s sizable circulating supply, any reduction in confidence among major holders can outweigh the upward impact from ETF buying.

Off-Exchange Purchases Obscure Issuer Demand

In addition to delayed settlement, Marzella said that ETF issuers frequently source assets via over-the-counter liquidity providers rather than buying on public exchanges.

These transactions do not appear in exchange order books and therefore do not exert immediate, visible pressure on market prices. This means demand generated by the ETF may already be accumulating behind the scenes, but its influence is not yet reflected in price charts.

Marzella concluded by noting that ETF-driven effects typically emerge gradually. He referenced the behaviour of Bitcoin following its spot ETF approval in early 2024, when price movement was initially muted before significant gains developed later. His view is that XRP may follow a similar pattern, with market impact becoming more apparent once settlement flows, OTC activity, and broader market conditions align.