How The Canary XRP ETF Broke Records and Broke Expectations

This article was first published on The Bit Journal: Contrary to what pundits expected, the launch of the Canary XRP ETF coincided with a general downtrend in the crypto market. What could be the cause?

The XRP token price crashed during trading on Thursday by 3% even after the highly anticipated Canary XRP ETF launch. The fund may have seen over $58 million worth of shares exchange hands on the first day of trading, but it left the broader cryptocurrency market highly volatile.

According to a post on social media platform X by Bloomberg senior ETF analyst Eric Balchunas, the Canary XRP ETF (XRPC) launch has had the biggest debut for any ETF this year among the over 900 launches. The expert revealed that XRPC generated $26 million within the first hour of trading alone.

XRP Token Price Falls Predictably

The previous record for an ETF launch was held by Bitwise’s Solana ETF (BSOL), which did about $57 million in day-one volume. The record sale was followed by a massive $72 million on the second day. Commenting on the record sale following the Canary XRP ETF launch, Balchunas stated:

“The two of them are in a league of their own, tho as 3rd place is over $20 million away.”

Despite the massive sale coming immediately after the Canary XRP ETF launch, users can’t understand why the XRP token price would be falling when there’s every indication that the US Securities and Exchange Commission (SEC) would be approving several other ETF applications. According to analysts, the main reason for the XRP token’s price fall is that prices are correlated with those of BTC and other altcoins, whose prices are also crashing.

Fear of Liquidation is Key Factor

For example, Zcash, which has been on an overwhelming Bull Run, just experienced a 20% crash from its all-time high. Other Altcoins, such as Litecoin, Solana, and Hedera, whose ETFs are already trading, have also experienced crashes in recent days and remain in a deep bear market after falling by over 20% from their recent high prices.

According to analysts, the XRP token price may have also fallen because traders are afraid to buy the token and others due to the recent massive liquidation, where over 1.6 million traders were wiped out after XRP bulls suffered a $160 million wipeout. Since the enormous liquidation occurred, there has been little activity in the futures market, a notable occurrence given the segment’s previous high level of activity.

Conclusion

The launch of the Canary XRP ETF is seen as a monumental step in the process of crypto adoption, as it validates digital assets within the established financial market, paving the way for the eventual mainstream acceptance of cryptocurrencies. While the historic launch signifies that regulated crypto investment could soon become the norm and reshape the digital asset landscape, the failure of the XRP token price to match the market buzz should be seen as a common strategy crash that occurs around the time a significant event takes place, as investors await the next catalyst.

Glossary to Key Terms

XRP ETF: A stock market product that lets big companies and regular investors buy shares that are backed by real XRP coins.

Bull Run: A period of time where the majority of investors are buying, demand outweighs supply, market confidence is at a high, and prices are rising.

Liquidation: The forced closure of a trader’s leveraged position by an exchange or lending protocol because the trader can no longer meet the margin requirements to keep the trade open.

Frequently Asked Questions about XRP ETFs

Why did the launch of an XRP ETF affect the price of XRP?

Historically, ETF approvals have brought more liquidity and potentially higher demand, which can sometimes lead to price increases. However, the actual impact depends on investor interest and broader market conditions.

What are the requirements for an XRP ETF to launch?

Usually, regulators must have legal clarity on the status of XRP, approve custodians, and ensure fund operations comply with market rules. The SEC’s position is a key factor for US-based products.

How is an XRP ETF different from holding XRP?

With an ETF, you don’t manage crypto wallets or private keys; instead, you own shares in a regulated product that tracks XRP’s price. Direct holders have control over their assets but bear full responsibility for their security and storage.

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