Ripple Defends $1.49 Even With 1 Billion Released! XRPR·XRPI Breaks $1.70, Rally Starts

▲ XRP, ETF/ChatGPT generated image ©

Amidst the shock of a massive escrow release amounting to 1 billion units, Ripple is defending the $1.49 level and seeking to reclaim $1.70. Meanwhile, first-generation Ripple-related Exchange Traded Funds (ETFs) are facing a price linkage test amidst fierce competition with new spot ETFs. While massive inflows of spot ETF funds and on-chain ecosystem growth are supporting the downside, new market funds are rapidly shifting to cheaper spot ETFs due to structural cost disadvantages and the burden of futures roll-over costs.

According to TradingNews, an investment media outlet, on October 1 (local time), Ripple (XRP) traded down 1.6% from the previous day during US market hours at $1.4933, remaining within its daily trading range of $1.49 to $1.54. On this day, Ripple Labs periodically released a total of 1 billion XRP from escrow through four transactions, valued at $1.49 billion based on current market prices. Lex-Osprey's XRP ETF (XRPR) and Volatility Shares' futures-based XRP ETF (XRPI), which are linked to this, are also experiencing short-term adjustment pressure, with their respective assets under management (AUM) reaching $53.4 million and $113.09 million, totaling approximately $166 million.

First-generation funds face a clear fee disadvantage compared to recently launched standard spot ETFs due to structural limitations. XRPR, which adopts a dual structure combining direct holdings and European Exchange Traded Products (ETPs), has a 0.75% management fee plus ETP-specific costs, and a 30-day median bid-ask spread of 0.90%, leading to significant trading cost burdens. XRPI, which rolls over Chicago Mercantile Exchange (CME) futures contracts, also has a total expense ratio of 1.68%. This is pointed out as a major factor increasing the burden of compounded costs for long-term holders when compared to spot ETFs like Bitwise, which directly hold physical assets and charge a low fee of 0.34%.

Conversely, the high-interest macroeconomic environment provides a unique cash flow advantage to futures-based XRPI. As the tightening policy continues, with the US 10-year Treasury yield soaring to 5.34% and the 2-year yield approaching 4.88%, XRPI generates annual interest income of 4.5% to 4.9% from its $113.08 million in cash and short-term Treasury bills held as futures collateral. Based on this, XRPI pays monthly dividends of 2.4% to 2.8% annually, partially offsetting the yield gap. In contrast, XRPR and general spot ETFs, which directly hold coins or invest in European ETPs, do not generate their own cash interest income from their held assets.

The key to medium-to-short-term price movements still lies with escrow supply pressure and macroeconomic indicators. Even if Ripple Labs typically re-locks 60% to 80% of the released volume, the net inflow of 200 million to 400 million units per month is still 2 to 4 times higher than the monthly absorption of spot ETFs. Additionally, inflationary pressures persist, with the Institute for Supply Management (ISM) Manufacturing Prices Index surging to 77.9 and the Dollar Index (DXY) hovering around 102. Technically, if XRP's primary support level of $1.46 is maintained, XRPR's Net Asset Value (NAV) could find support at $11.25 and XRPI at $8.20. However, if the Fibonacci 0.618 retracement level of $1.70 is not decisively broken, range-bound consolidation could continue.

Experts presented a 50% probability as a base scenario for XRP to reach $1.70 by mid-November, assuming Ripple Labs regularly re-locks escrowed amounts and ETF fund inflows are sustained. In this case, XRPR's Net Asset Value (NAV) is expected to rebound to $13.12 and XRPI to $9.54. Conversely, a bearish scenario with a 30% probability suggests that if Treasury yields rise further due to overheating employment indicators, breaking the $1.40 support level, XRP could fall to $1.30, with XRPR dropping to $10.05 and XRPI to $7.30. Accordingly, experts advise prioritizing low-cost spot ETFs for new entries but suggest selectively utilizing XRPI for investors seeking monthly dividends in a high-interest rate environment, considering futures roll-over costs.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*