XRP Price Prediction: Bitwise Submits $320M-Insured XRP ETF Application

Bitwise has filed an updated S-1/A registration statement with the U.S. Securities and Exchange Commission (SEC) for its proposed XRP Exchange-Traded Fund (ETF).

This step is a major advancement in Bitwise’s attempt to provide a regulated investment vehicle centered around XRP, a leading cryptocurrency. If approved, the ETF would allow investors to access XRP through stock exchanges, improving both the accessibility and liquidity of the asset.

The filing outlines the core structure of the ETF, including the formation of a trust and the mechanisms for creating and redeeming shares. Additionally, Bitwise highlights its emphasis on security, including the use of cold storage for the majority of assets. Only a small portion will be stored in hot wallets for daily operations. Coinbase Global, the appointed custodian, maintains a $320 million insurance policy to cover risks such as theft and cyberattacks. However, Bitwise acknowledges that this coverage might be insufficient in severe cases.

My prediction for tomorrow’s #xrp price
.545 to .555
Form C or not.
Nothings moves this turd.
I’d love to be wrong, but I feel that if I am wrong it’s because it will be to the down side.

— Fred Neck (@fred_neck) October 17, 2024

Cold Storage and Custody Measures Enhance Security

Security is a top priority for Bitwise’s XRP ETF. Most assets will be held in cold storage, which is considered the safest method for protecting cryptocurrency from hacks. A small portion of XRP will remain in hot wallets to meet operational needs, minimizing exposure to potential threats.

Bitwise’s filing also emphasizes that the trust’s assets will be kept separate from the custodian’s other holdings, ensuring the safety of XRP’s private keys. The ETF will rely on a chief executive agent to conduct XRP transactions across multiple platforms, including Bitstamp, Kraken, Coinbase, and LMAX. This strategy aims to increase trading efficiency and minimize delays.

In terms of share creation and redemption, the ETF will operate in blocks of 10,000 units called Baskets. The number of XRP required per Basket will be recalculated daily, factoring in fees and expenses, to ensure transparency.

Regulatory Uncertainty and Investor Protection

Bitwise’s XRP ETF comes at a time when XRP’s regulatory status remains unclear. Since the initial S-1 submission on October 2, the SEC has not reached a decision on whether XRP should be classified as a security. The SEC is currently appealing the Ripple ruling, which initially found that XRP was not a security, adding to the uncertainty surrounding the ETF approval process.

Bitwise has prepared for this possibility by including a clause in its ‘Trust Agreement’ that states the trust will liquidate its holdings if XRP is classified as a security. This provision is designed to protect investors from potential regulatory fallout. Despite the uncertainty, Bitwise remains optimistic, citing the growing institutional interest in cryptocurrency as a potential driver for approval.

The firm also stresses the importance of insurance in protecting investors. While Coinbase’s $320 million insurance policy covers a range of risks, Bitwise acknowledges that this insurance is shared among all of Coinbase’s customers and may not fully cover the trust in the event of a major loss.

From my perspective, this creates a paradox where XRP is being recognized for its legitimacy through the ETF approval, yet the legal battle continues. This suggests that XRP is gaining traction in the broader financial market, but the regulatory landscape remains complex.

— Al Rizqi (@saiyo1307) October 17, 2024

XRP Price Forecast: Technical Outlook 

As Bitwise pushes forward with its ETF application, XRP is experiencing bullish momentum in the market. Currently trading at $0.5627, XRP has completed its 38.2% Fibonacci retracement at $0.5631, a key pivot point.

If the price breaks above this level, XRP could rise toward the 50% Fibonacci retracement at $0.5840, with further gains toward $0.5977 possible.

Support for XRP is found at $0.5423, with the next support level at $0.5256. On the upside, $0.5804 serves as the first resistance level, followed by $0.5977. A sustained break above these levels could signal more upward movement for XRP.

The Relative Strength Index (RSI) is at 67.9, suggesting that XRP is approaching overbought territory. This signals that traders should monitor the market for potential exhaustion. The 50-day Exponential Moving Average (EMA) is at $0.5623, reinforcing the short-term bullish outlook.

The Growing Demand for Cryptocurrency ETFs

Bitwise’s XRP ETF proposal is part of a broader trend of growing interest in cryptocurrency ETFs. Several asset management firms are seeking approval for similar products, driven by the increasing demand for regulated investment vehicles that offer exposure to digital assets.

While the SEC has been cautious about approving such ETFs due to concerns over market manipulation and investor protection, the increasing institutional interest in cryptocurrency may influence the regulatory body’s decision.

If approved, Bitwise’s XRP ETF could offer a new, regulated way for investors to access XRP, eliminating the need to manage digital wallets or navigate cryptocurrency exchanges. This approval would have broader implications for the cryptocurrency market and could set a precedent for future digital asset ETFs.

As the SEC reviews Bitwise’s application, investors and the wider financial community will closely watch for updates. The approval of an XRP ETF could be a pivotal moment for cryptocurrency adoption in traditional financial markets.