A recently launched XRP ETF is firing on all cylinders as investor demand rises. The Teucrium 2x Long Daily XRP ETF (XXRP) has already accumulated over $112 million in assets in the past two months.
Its performance has also been better than that of XRP. XXRP has risen by over 45% since its approval, compared to a roughly 25% increase in the XRP price, as illustrated in the figure below.
Its increased assets are notable for two main reasons. First, it is one of the most expensive ETFs to invest in, with an expense ratio of 1.89%. In other words, a $10,000 investment in it will cost about $189 annually.
In contrast, a similar investment in the iShares Bitcoin ETF (IBIT) will cost just $25 annually, while an investment in the Vanguard S&P 500 ETF (VOO) will cost about $3.
The high expense ratio is likely because XXRP is a leveraged fund, allowing investors to make twice the daily performance of the XRP price. Nevertheless, it remains more expensive than other leveraged ETFs like TQQQ and SOXL, which charge about 0.75%.
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Second, the ongoing inflows in XXRP are a sign that there is more demand for XRP ETFs than the 2x Solana ETF (SOLT). That’s because SOLT, which was launched in February, has attracted less than $35 million in assets.
Therefore, the spot XRP ETFs will likely have more demand when the SEC approves them later this year. JPMorgan analysts have predicted that these assets will have over $8 billion in inflows in the first year, compared to Solana’s $6 billion.
Traders are flocking to the new XRP ETF due to several catalysts. For example, Ripple Labs may acquire Circle, positioning it as the second-largest stablecoin company after Tether.
The SEC vs. Ripple case has ended, opening the company to more deals and partnerships in the United States as it seeks to become Swift’s biggest rival. The XRP price is also benefiting from the recent Hidden Road acquisition, which will lead to more flows to the XRP Ledger.
