With XRP‘s (CRYPTO: XRP) price rising by 256% in the last three years alone, it’s a bit surprising that there’s still a trickle of substantive new reasons to buy it.
Nonetheless, there’s a set of upcoming catalysts that support the idea that buying this coin is a smart move. Let’s take a peek at what’s likely to occur soon, and why it’ll drive XRP higher over the long term.
Following in the footsteps of other cryptocurrency majors like Bitcoin and Ethereum, XRP could soon be included in a handful of different exchange-traded funds (ETFs) which are up for approval by regulators at the Securities and Exchange Commission (SEC), per filings made in late January by multiple asset manager companies, including Grayscale Trust and Purpose Investments.
Until recently, the SEC’s prior lawsuits against Ripple, the issuer of XRP, made the chances of such an ETF ever getting approved dubious. But, with the Trump administration’s pro-crypto stance, it is now more likely than not that ETFs holding XRP will be issued within the next year. That’ll be a catalyst for the coin to attain higher prices than before for several reasons.
First, the point of these ETFs is to make XRP an investable asset for investors with traditional financial accounts, like retirement accounts or brokerage accounts. Without an ETF, those investors would need to sign up for additional services, or use specialized cryptocurrency software to enable them to buy and hold the coins directly rather than via a proxy. Crypto enthusiasts probably weren’t dissuaded by those additional requirements. But it’s safe to say that there many people would only buy XRP if it was as easy as buying any other stock or financial instrument via the same interface that they use to invest in those securities.
The consequence of the ETFs getting approved, assuming they are, will be to increase the demand for XRP, and likely the average trading volume as well. As of Feb. 6, XRP generated 24-hour volume of around $8 billion.
As investors buy the ETFs, the issuers of the ETFs will need to buy XRP directly in order to properly deliver the investment performance of the underlying coin, which is what investors are looking for in the first place. Therefore, it’s reasonable to expect that there will be more upward pressure on the price of XRP, and also that the chain will generate more fees, which could be reinvested in improving its technology.
So there are two components of XRP’s investment thesis that stand to be supported by these ETFs, and that’s very positive for holders. It’s likely that the coin would get a bump upon news of an approval.
