A wave of exchange-traded funds (ETFs) linked to XRP, the cryptocurrency issued by Ripple Labs, has sparked excitement among investors. The potential for these financial instruments, especially spot ETFs, to boost the price of XRP and drive institutional adoption is generating high expectations.

However, the history of cryptocurrencies teaches us that optimism doesn’t always translate into tangible results. While ETFs represent an opportunity, they don’t guarantee sustained price growth. Investors should keep a cool head and carefully analyze risks before getting carried away by euphoria.

A New Chapter for XRP in the Financial Markets

XRP’s financial landscape has taken a significant turn in recent weeks. On April 9, 2025, the Teucrium 2x Long Daily XRP ETF (ticker XXRP) began trading on the U.S. market.

Designed to double XRP’s daily performance using 2x leverage, this ETF allows investors to amplify their gains or losses on short-term trades. For example, if XRP rises 5% in a day, the fund should gain 10%; if it falls 5%, the fund would lose 10%. However, its daily compounding structure makes it less suitable for long-term strategies, as performance can deviate from twice XRP’s movement over time.

ProShares has also drawn attention with its plan to launch three ETFs based on XRP futures: the Ultra XRP ETF, the Short XRP ETF, and the Ultra Short XRP ETF. The first seeks to double the daily performance of XRP; the second, an inverse ETF, gains value when XRP falls; and the third combines the inverse strategy with 2x leverage.

ProShares previously made waves in 2021 by launching the first bitcoin futures ETF, marking a milestone in integrating cryptocurrencies into traditional finance. These ETFs were initially expected to launch on April 30, but Bloomberg ETF specialist James Seyffart clarified that no firm date has been confirmed. “There’s no set launch date yet, but we believe they will launch, probably in the short to medium term,” he said. If the U.S. Securities and Exchange Commission (SEC) doesn’t intervene, the ETFs could launch automatically once a date is set.

Additionally, the Chicago Mercantile Exchange (CME) confirmed it will begin trading XRP futures in large (50,000 XRP) and micro (2,500 XRP) contracts on May 19, 2025. These contracts allow investors to speculate on XRP’s future price without owning the cryptocurrency directly. Futures are used both for speculation and for hedging in volatile markets. This development offers traders additional tools to manage XRP exposure without having to hold the asset itself.

Proshares' XRP Futures ETF Application. Source: SEC.

The Promise of XRP Spot ETFs

The real focus, however, lies with spot ETFs funds that buy and hold the cryptocurrency directly. Several companies, including Canary Capital, 21Shares, Bitwise, Grayscale, Franklin Templeton, and CoinShares, have filed applications with the SEC to list such products.

Unlike futures or leveraged ETFs, spot ETFs generate real demand for XRP, as issuers must acquire the underlying asset to back the fund. This, in theory, could increase the price and attract institutional investors seeking regulated exposure.

Analyst Armando Pantoja highlights the importance of these developments. According to him, futures ETFs legitimize XRP in traditional financial circles and grab Wall Street’s attention. “Every major cryptocurrency that got a futures ETF eventually got a spot ETF. Bitcoin did it in 2024 after its futures in 2021, and XRP is following suit,” he notes.

He predicts that a spot ETF could unlock massive demand, with capital inflows exceeding $100 billion. Investor John Squire share this view, albeit with some caution. “A spot ETF buys real XRP, which creates direct demand. This provides greater institutional exposure, recognition in traditional finance, and a positive narrative that benefits the price,” he says. However, he warns that spot ETFs are not a “silver bullet” for mass adoption.

A Hopeful Regulatory Change

Optimism is also being fueled by a shift in the regulatory environment. The SEC, now led by Paul Atkins, has adopted a more open stance toward cryptocurrencies. Atkins has sought to differentiate himself from the previous administration, which many viewed as ambiguous and hostile to innovation.

Paul Atkins is the 34th chairman of the U.S. Securities and Exchange Commission. Source: Screenshot – YouTube @WhatsUpCripto

A newly formed Cryptocurrency Working Group, led by Hester Peirce, reinforces this more open-minded approach. So far in 2025, the SEC has dropped lawsuits against several major crypto firms, including Ripple, Coinbase, Robinhood, Kraken, and Yuga Labs. This signals a move toward clearer and more structured regulation. Given this context, the likelihood of XRP spot ETF approval appears to be rising. ProShares has already applied for a spot ETF in the U.S., and a similar product is already trading on Brazil’s stock exchange.

While these precedents suggest XRP is gaining momentum in regulated markets, approval is not guaranteed. Investors should avoid basing decisions solely on expectations.

Why Enthusiasm Doesn't Guarantee Results

Despite the positive developments, an increase in XRP’s price should spot ETFs be approved is not assured. ETFs facilitate institutional investment, but they are not a magic bullet. Recent crypto history provides cautionary examples. For instance, when Ethereum spot ETFs launched in July 2024, they attracted $2.4 billion in inflows, but ETH’s price has since dropped more than 50%, remaining 62% below its all-time high. This performance contrasts with the early success of Bitcoin spot ETFs, highlighting that outcomes vary based on asset and market conditions.

A common market pattern is the “buy the rumor, sell the news” effect. ETF announcements may drive up prices speculatively, but actual launches often trigger sell-offs as investors take profits. XRP could face this same pattern, especially if ETF approvals are delayed or underwhelming.

Another factor is XRP’s supply dynamics. Ripple Labs releases 1 billion XRP monthly via an escrow system. While some of this supply is relocked, the consistent release could dampen any ETF-driven price surge. If spot ETFs fail to attract significant capital, selling pressure from Ripple’s ongoing releases could stagnate or depress the price.

Additionally, XRP operates in a competitive landscape. It must contend with Bitcoin, Ethereum, and other digital assets also vying for institutional capital. Bitcoin and Ethereum, having already launched spot ETFs, currently dominate this arena. XRP’s past regulatory issues may also make investors cautious, potentially limiting how much capital flows into its ETFs.

An Opportunity With Risks

 XRP ETFs mark an important step toward integrating the cryptocurrency into mainstream financial markets. Futures trading, leveraged products, and the prospect of spot funds create new avenues for investors. The SEC’s friendlier regulatory posture also suggests a more promising future. Still, investors should remain cautious.

Ethereum’s recent experience shows that ETF approval doesn't guarantee price increases. XRP’s supply mechanisms, market competition, and broader macroeconomic conditions remain key challenges. Savvy investors will maintain a diversified approach and avoid making decisions based solely on hype. In crypto, opportunities often walk hand in hand with risks and XRP is no exception.