Mathew Sigel, head of Digital Asset Research at VanEck, revealed the reasons why he believes it is “unlikely” to issue an exchange-traded fund (ETF) based on XRP, the cryptocurrency issued by the company Ripple.
To support his opinion, the director of the digital asset management firm gave as an example the research work they carried out before making the decision to file an application with the United States Securities and Exchange Commission (SEC) to launch a solana (SOL)-based ETF.
In an interview with Thinking Crypto, Sigel said that to launch a financial instrument of this nature, “the issuer must be convinced that the asset is a good investment and take into account who its creators are, which exchanges it is present on, and the custodian of funds that support this asset.”
In the case of the Solana ETF, he said that they found clients who wanted to buy it, which contrasted with the findings of the XRP research . He revealed:
“When we think about XRP, we notice that there is a lack of conviction and customer demand. So I would say that an ETF for that asset is less likely.”
Mathew Sigel, Head of Digital Asset Research at VanEck.
This analysis by the firm may be a response to the fact that XRP has entered a period of decline from which it still cannot emerge. Currently, the market capitalization is $24 billion, a far cry from the $127 billion it recorded in 2018. It is the 7th cryptocurrency with the highest market capitalization.
XRP market cap from 2017 to July 11, 2024. Source: CoinGecko.
As for its price, at the time of publication of this note, it is $0.4465, which means that it is 88% below the all-time high (ATH) of $3.84 reached in 2018.
XRP price since its ATH until July 11. Source: CoinGecko.
What's happening with XRP?
The fall in XRP values began to increase amid regulatory pressure against its issuing company. In 2020, Ripple was sued by the entity now led by Gary Gensler for selling XRP, which is considered an unregistered security and therefore must be regulated.
In 2023, the country's courts already ruled out the token as a security, but so far its market has not recovered the levels it had in previous years.
It is also important to clarify that there is no perception of increased use of the currency for payments, as its issuing company claims. Ripple is also criticized for offering CBDCs (central bank digital currencies), which do not offer self-custody and data privacy.
In this regard, analyst Mike Fay indicated that development activity and the user base on the Ripple network have decreased. “CBDCs are not something that people seem to be excited about,” he concluded.
On Reddit, meanwhile, several traders argue that XRP’s poor performance cannot be blamed on the SEC lawsuit . “I don’t think it would have gone much higher. It just doesn’t stand out in any facet and I maintain that its time in the top 10 [by market cap] is coming to an end,” said one investor.
The truth is that Sigel's statements put a damper on the optimism expressed by Ripple CEO Brad Garlinghouse after the SEC approved spot funds for ether (ETH) . “It's just a matter of time, there will be an XRP ETF, a SOL ETF and an ADA ETF. That's great,” he said.
They also differ from the opinion of Geoffrey Kendrick, head of digital asset and forex research at Standard Chartered Bank, who said that XRP would be considered for future ETFs but in 2025.
Finally, it is worth noting that the firm 21Shares has an exchange-traded product (ETP) based on this token that operates under the ticker AXRP on the Swiss Stock Exchange.
