Probable approval of an ETF on XRP: investors are betting on the SEC’s ok

The approval of an ETF on XRP by the Securities and Exchange Commission (SEC) is increasingly anticipated by investors, especially after the conclusion of the long legal battle between Ripple and the U.S. regulatory body. 

The CEO of Ripple, Brad Garlinghouse, announced the closure of the case on March 19, with the SEC deciding to withdraw the appeal against the company.  

As a result, industry experts like Nate Geraci, president of ETF Store, believe that it’s only a matter of time before an exchange-traded fund (ETF) based on XRP is approved.

Users of Polymarket, a popular crypto betting platform, also give a high probability to a positive decision by the SEC, with forecasts reaching 86% probability that an XRP ETF will be approved by 2025.  

Polymarket Forecasts: the market bets on the XRP ETF by 2025, SEC permitting 

The long dispute between the SEC and Ripple originated in December 2020. That is when the agency initiated proceedings against the company, accusing it of selling XRP as an unregistered security for a total value of 1.3 billion dollars.

After more than three years of disputes, on March 19, 2024, Brad Garlinghouse confirmed that the SEC has decided to drop the appeal. Thus officially putting an end to the legal battle.

This resolution has sparked new debates about the possibility of seeing the approval of an ETF on XRP soon. This could represent an important opportunity for institutional investors and for the entire cryptocurrency market.

According to Nate Geraci, it would be “obvious” that it is only a matter of time before the SEC approves a fund that replicates the price of XRP. 

Similarly to what happened recently with Bitcoin ETFs. BlackRock and Fidelity, giants of asset management, could be among the companies ready to launch these financial products.  

The crypto community also seems to align with this optimistic view. The financial forecasting platform Polymarket has assigned an 86% probability that an ETF on XRP will be approved by December 2025.  

According to the platform’s rules, the bet will be considered positively resolved only if the SEC actually approves an ETF based on XRP by December 31, 2025. 

At the time of the survey, the volume of the betting market reached approximately 55,000 dollars, reflecting a strong interest from investors in the crypto sector.  

However, the forecasts for the short term are less optimistic. According to Polymarket, there is only a 42% probability that the approval will occur by July 31, 2024.

Reliability of Polymarket forecasts  

Despite being a platform for betting decentralized, the predictions of Polymarket have often proven to be quite accurate.

According to the data from Dune Analytics, the bets on Polymarket had an accuracy of over 90% when analyzed one month before the closing of the prediction market. 

This established reliability could strengthen investors’ confidence in the likelihood of approval of an ETF on XRP in the near future.  

Surprisingly, the end of the legal dispute between Ripple and the SEC did not have a significant impact on the price of XRP. 

On March 19, the same day Brad Garlinghouse announced the conclusion of the case, the price of the token was $2.32, according to CoinGecko.  

After a few days, XRP recorded a modest increase, settling around 2.44 dollars, marking only a 5% growth.  

According to analysts, the positive outcome of the situation had already been anticipated by the market, which is why there were no significant bull movements. 

Nicolai Sondergaard, analyst at Nansen, explained that the market had already taken into account the potential favorable outcome in establishing the price of the asset.  

Waiting for the next developments in the crypto market  

The potential approval of an ETF on XRP would represent an important step for the cryptocurrency sector. Consequently making the asset more accessible to institutional investors and perhaps leading to an increase in market value.

At the moment, it remains to be seen if and when the SEC will give the green light to an ETF on XRP and which companies will apply for the launch of the first fund based on this asset. 

However, with the recent decisions of the SEC and the growing market interest, the optimism around the approval continues to grow.