XRP Eyes $3.60: ETF Hopes and Derivatives Fuel Rally

XRP's Push Towards $3.60: Beyond ETF Approval

XRP (XRP) experienced a surge earlier this week, hitting a two-week high of $3.04, driven by growing anticipation of a potential U.S. exchange-traded fund (ETF) and increased institutional engagement in XRP derivatives. However, the question remains: can XRP revisit the $3.60 level last seen in July?

Derivatives Market Signals Increased Interest

Demand for XRP futures has seen a notable uptick, climbing 5% month-over-month to 2.69 billion XRP (approximately $7.91 billion). Chicago Mercantile Exchange (CME)-listed XRP futures contracts have jumped by 74% in the same period, reaching 386 million XRP, signalling stronger participation from institutional players like fund managers and market makers.

Futures Premium: A Balanced Outlook

While increased futures activity reflects growing interest, it's crucial to examine leverage imbalances. Currently, XRP monthly futures trade at a 7% premium, suggesting balanced leverage demand. This muted outlook is partly due to XRP's underperformance compared to the broader altcoin market.

XRP's Underperformance Relative to Altcoins

Since August, XRP has remained relatively flat, while the altcoin market has advanced by 14%. This altcoin rally has been fueled by substantial gains in other cryptocurrencies, including Hyperliquid (HYPE), Solana's SOL (SOL), Cardano's ADA (ADA), and Ether (ETH). XRP's primary momentum in August was linked to the partial resolution of the dispute between Ripple and the SEC.

ETF Approval: A Key Catalyst

The potential approval of an XRP ETF in the U.S. remains a critical factor influencing XRP's price. Bloomberg analysts estimate a 95% probability of approval, with a final SEC decision expected in late October. Innovative products combining ETF and ETN structures, similar to Solana Staking (SSK), might emerge sooner, potentially bypassing direct SEC approval.

Stablecoin Growth and XRPL Adoption

Ripple's stablecoin, RLUSD, has surpassed $700 million in assets, yet nearly 90% of its supply is issued on the Ethereum network, providing limited direct demand for the XRP Ledger. The stablecoin market is dominated by established players with deeper liquidity, posing considerable competition.

XRPL's Real World Asset (RWA) Tokenization

While some envision XRPL becoming a major international payment facilitator or expanding its role in tokenization, XRPL accounts for only 2% of outstanding Real World Assets (RWA), according to data from RWA.xyz, trailing other blockchains such as Avalanche, Stellar, and Aptos.

While XRP's potential to reach $3.60 cannot be dismissed, the modest Total Value Locked (TVL) on XRPL suggests that sustaining such momentum may be challenging. Platforms like Codeum play a crucial role in ensuring the security and reliability of blockchain assets, which is essential for sustained growth and adoption.