A big investment firm, Amplify (managing $12.6 billion!), just filed paperwork for a new XRP ETF. Instead of directly buying XRP, this ETF uses a smart strategy.
How it Works: Options and ETFs
The ETF will mostly (at least 80%) invest in things that move with XRP’s price. Think XRP ETFs and options contracts on those ETFs. The remaining 20% will be in safe, short-term investments like US Treasuries.
Amplify plans to use options to create “synthetic” XRP exposure. This means making money from selling options, generating a steady income stream. This is different from a regular XRP ETF that directly holds XRP.
Futures and the Future of XRP ETFs
Experts are looking at XRP futures markets for clues about investor interest. The fact that these futures and related ETFs have been doing well suggests there’s a lot of demand. Some believe that approving XRP ETFs could lead to a huge surge in investment, similar to what happened with Bitcoin futures ETFs. Many crypto ETF applications are currently pending with the SEC.
Indirect Exposure, Reduced Risk
This ETF offers indirect exposure to XRP. You won’t own XRP directly; instead, you’ll be invested in things that react to its price changes. This avoids the headaches of directly holding XRP, like custody and storage issues. This might attract investors who want the XRP price action but prefer a less complicated investment.
The Big Picture: A Crowded Field
Amplify’s filing brings the total number of XRP ETF applications to a whopping 16! There are also many other crypto ETF applications, with a total of at least 96 according to one analyst. Everyone’s eyes are on an October deadline, when the SEC might make some big decisions on these proposals.