What’s the next big crypto spot ETF?
Here are 5 key observations about XRP.

2024 appears to be the year where cryptoassets have entered the mainstream era. Bitcoin spot ETFs have started trading in January this year and have already become the most successful ETF launch in history, outpacing first year inflows into ETFs like Gold (GLD) or the NASDAQ 100 (QQQ) by a very wide margin.

Ethereum spot ETFs have also been approved this year and the set of possible investment vehicles is on the rise.

Several other spot ETFs on major cryptoassets have already been filed this year, including on Solana as well as on XRP. Much attention has been paid to Solana as a likely candidate for the 3^rd single asset spot ETF approval and there is a high probability that XRP ETFs could be approved as the 4^th single asset spot ETF in the US.

5 key observations about XRP:

1. Long track record

XRP (formerly known as Ripple) is one of the oldest tokens among all cryptoassets. It has stood the test of time and still remains among the top 5 cryptoassets by market cap (ex stablecoins) in the world. It is also among the top 5 non-stablecoin cryptoassets by average trading volume across various exchanges. ^[1]

XRP has already been established in June 2012 and has already started trading in August 2013, even before major cryptoassets like Dogecoin (DOGE) or Ethereum (ETH).

In fact, XRP is the 5^th oldest cryptoasset ever established and it is one of the few cryptoassets which has even managed to outperform Bitcoin (BTC) in two consecutive bull market cycles, which has only been achieved by Dogecoin (DOGE) and to some extent by Ethereum (ETH) so far.

XRP is one of the few tokens which has outperformed BTC in 2 consecutive cycles

2. High retail interest

While some institutional fund manager surveys indicate more interest for Bitcoin, Ethereum, and Solana, we have identified a significant retail interest for XRP based on relative Google search interest.

XRP Sees Surge in Google Trend Searches

This observation is also supported by a recent survey by EY among retail investors that has revealed that XRP ranks among the top 4 cryptoassets by retail investor allocation:

In general, despite rising institutional interest in US spot crypto ETFs, the share of AuM held by retail investors is still approximately 80% based on the recent 13F filings for spot Bitcoin ETFs.

In other words, US spot crypto ETFs are generally still dominated by retail investors which potentially signals significant investor interest for the filed spot XRP ETFs in the US.

XRP Ranks 4th in Retail Investor Allocation, EY Survey Reveals

3. Decline in US regulatory uncertainty will benefit XRP

On the 13 ^th of July this year, Ripple celebrated the one-year anniversary of its landmark victory against the SEC, a pivotal event that provided regulatory clarity for XRP.

This decision solidified XRP's status as one of only two digital assets in the US deemed not to be securities.

Ripple is still awaiting a final decision from the court regarding remedies for institutional XRP sales conducted before December 2020. However, the key ruling-that XRP is not a security-remains unchanged. Ripple is optimistic that the Judge will handle this remaining aspect of the case fairly.

On October 2, the SEC announced its intention to appeal the Court's ruling that certain historical XRP distributions were not securities.

Importantly, the SEC is not challenging the determination that XRP itself is not a security-a point the Court made unequivocally in its July 2023 decision. While the SEC's appeal of other rulings was disappointing, it was anticipated given the agency's ongoing opposition to the crypto industry.

On October 24, Ripple filed its Form C, detailing the issues it intends to raise in its cross-appeal. In light of the pending appeals, Ripple has placed the $125 million remedies payment in escrow.

The appeal and cross-appeal process is expected to continue into the first half of 2025, with oral arguments likely in Fall 2025, followed by a final ruling from the appellate court.

However, XRP is probably the token that should benefit the most from the recent change in the US administration and the decline in regulatory uncertainty, particularly because Gary Gensler has announced to step down as SEC chairman on the 20 ^th of January 2025.

è It is no surprise that XRP has already rallied +188% since the US election on the 5^th of November 2024.

4. XRP already has a wide array of real use cases

Many traditional investors that are sceptical of cryptoassets often claim that most cryptoassets have “no use case”. However, XRP is not one of them.

XRP has already a wide array of real use cases which mostly centre around cross-border remittance payments and payments in general. For instance, SBI Remit has teamed up with Ripple to power instant remittances between Japan and Thailand. MoneyMatch and Ripple make it cheaper and faster for Malaysian SMEs to pay global suppliers. Ripple helps Siam Commercial Bank drive innovation with instant cross-border remittances.

So, XRP is primarily utilised as a modern medium-of-exchange in the payments industry and therefore also complementary to other major cryptoassets like Bitcoin that are primarily regarded as a store-of-value asset.

RippleNet Global Adoption: Financial Institutions and Use Cases

The Total Addressable Market (TAM) of global cross-border payments is very substantial. According to a study by McKinsey , cross-border payment flows already reached approximately 150 trn USD in 2022 and are expected to reach 250 trn USD by 2027.

There is an increasing demand for instant payments which XRP is able to deliver with a payment finality of only 4 seconds on average and a max theoretical scalability of 1,500 transactions per second. In general, a small percentage of the global cross-border payments market could have a very significant impact on transaction count and overall network activity for XRP.

5. XRP is still reasonably valued and has significant upside potential

Despite the significant performance of XRP following the US election results, XRP is still not overvalued based on the Market Value-to-Realized Value (MVRV) valuation metric. The MVRV ratio is one of the most popular valuation metrics applied to cryptoassets and is similar to a price-to-book ratio in equities as it compares the market value with the cost basis of all tokens transacted.

This metric has recently increased back to its long-term average suggesting that XRP is currently at “fair value”.

XRP's MVRV Suggest Fair Value

All in all, these observations suggest that XRP is quite likely to be among the next wave of spot ETF approvals in the US with significant upside potential due to the decline in US regulatory uncertainty and the ongoing growth in cross-border payments worldwide.

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