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▲ XRP ETF/ChatGPT generated image ©
Despite repeated low-price buying by XRP (Ripple) Exchange Traded Funds (ETFs) listed on the U.S. stock market, absorbing a volume of nearly 1 billion tokens, they remain trapped in a large unrealized loss exceeding 30%, pushed down by the massive monthly release of escrow lockup volumes.
According to investment media TradingNews on September 3 (local time), the cumulative net inflow of seven XRP ETFs in the U.S. ranges from approximately $1.44 billion to $1.51 billion, but the total assets under management currently stand at only about $994 million. Due to price drops, approximately $516 million of the initial investment has evaporated, and the loss rate for investors relative to their total deposits exceeds one-third. Despite inflows of over $150 million in August, marking the best performance this year, the recovery of asset value continues at a slow pace.
The primary cause of this structural underperformance is a severe imbalance between Ripple's continuous token supply and the ETFs' buying capacity. While the ETF "army" absorbs an average of only about 109 million tokens per month, Ripple continues to release a net supply of 200 million to 400 million tokens into the market each month, even after re-depositing, such as unlocking 1 billion tokens from escrow on September 1. As the supply-demand imbalance, where monthly supply exceeds demand by more than 2.3 times, becomes entrenched, the buying pressure from ETFs merely serves as a price floor support rather than a catalyst for price increases.
The limitations of such accumulation are clearly revealed in disclosures from Bitwise, the largest issuer and a Bitcoin and cryptocurrency asset management firm. As of June 30, the Bitwise XRP ETF held 286,838,446 XRP at a cost of $480.6 million, recording an unrealized loss of 37.7%. Even after recovering to the $1.37 level following the August rally, it remains in a negative state, 18.1% below its cost. Furthermore, Grayscale sold 103 million tokens in the first half of the year, diluting the effect of fund inflows, and the fact that 84% of total inflows are concentrated in short-term oriented retail traders is also cited as a vulnerability.
The market is eyeing the scheduled September 15 vote in the U.S. Senate to end debate on the CLARITY Act, a bill concerning the structure of the U.S. cryptocurrency market, as the only potential turning point. If the bill passes, it is expected to attract massive institutional funds ranging from $4 billion to $8 billion, absorbing up to 5.8 billion tokens and potentially overwhelming the annual escrow supply in one go. However, some market participants estimate the probability of this bill passing to be low, around 10%, raising concerns that institutional inflow effects might be difficult to expect if the legislation fails.
From a technical perspective, XRP is defending the support zone between $1.35 and $1.38, attempting to break above the $1.55 resistance level, which is the upper boundary of a descending triangle pattern. If it definitively breaks above $1.55, an upward trajectory to $1.68 and $1.86 could open, and the total assets of all ETFs could swell to over $1.2 billion. Conversely, if the $1.35 support level breaks, it could fall to around the 50-day exponential moving average at $1.2112 or even $1.05. This could trigger massive redemption pressure from long-term trapped investors, and the risk of the total ETF assets shrinking below $700 million cannot be ruled out.
*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*
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