Original author: Weilin, PANews
On the evening of April 27, a piece of news about the U.S. Securities and Exchange Commission (SEC) has approved the ProShares Trust $XRP ETF to be publicly listed on April 30 spread rapidly in the crypto community and the market. However, because the original wording was a general category of XRP ETF, many users mistakenly thought that this was the first U.S. altcoin spot ETF approved after BTC and ETH spot ETFs, which aroused short-term market sentiment fluctuations.
However, after verification, it was found that ProShares was not going to launch a spot ETF, but three futures-based XRP leveraged or inverse ETFs. Although this is an important addition to the XRP financial product system, it has not yet reached the market significance represented by the first altcoin spot ETF. This oolong ultimately did not have a substantial impact on the XRP price, and only triggered a small short-term increase.
Three ProShares XRP futures ETFs coming soon
According to public information, ProShares will launch the following three new funds on April 30:
Ultra XRP ETF: Providing 2x leveraged XRP futures exposure
Short XRP ETF: Provides 1x inverse exposure to XRP futures
Ultra Short XRP ETF: Provides 2x inverse exposure to XRP futures
The three products were initially filed in January this year, and the SEC did not raise any objections during the review, effectively acquiescing to their launch. It is worth noting that futures-based ETFs provide exposure to price fluctuations of XRP futures contracts, and these ETFs from ProShares will track the price of XRP through the XRP index. This means that, unlike spot ETFs that require actual purchases of XRP tokens, futures XRP ETFs allow investors to bet on their price movements without holding XRP tokens.
Additionally, while the SEC filing allows the funds to become effective on that date, actual trading may not begin immediately, depending on the readiness of the exchanges and other operational factors.
XRP futures ETF queue expands, spot ETF still awaits approval
These three ProShares funds will become the second, third, and fourth XRP-backed ETFs in the U.S. market.
Earlier this month, Vermont-based asset management company Teucrium Investment Advisors LLC launched the first XRP ETF in the U.S. market, which also provides leveraged exposure to XRP prices but does not directly hold the asset. Teucrium 2 x Long Daily XRP ETF (code: XXRP) was officially launched on April 8 and aims to achieve 2 times the daily performance of XRP through swap contracts. The ETF is designed as a 2x leveraged trading tool with a daily reset mechanism.
Teucrium CEO Gilbertie said the fund is not intended for long-term holding, and warned that in a consolidating or slowly volatile market, the fund may lose value due to the compounding effect inherent in leveraged intraday reset products. Gilbertie also pointed out that the fund is mainly for aggressive traders who are bullish on XRP but cannot obtain leverage exposure through traditional margin accounts.
Regarding this product, Eric Balchunas, senior ETF analyst at Bloomberg, once wrote on the X platform: It is very strange (and it may be the first time) that the first ETF of a new asset is leveraged. Although the spot XRP ETF has not yet been approved, we think the probability of approval is quite high.
Currently, ProShares separate spot XRP ETF application is still awaiting approval, and similar spot fund applications from asset management companies such as Grayscale, 21 Shares and Bitwise are also in the same approval stage .
Leveraged ETFs have obvious short-term tool attributes
Market sentiment for ProShares upcoming three leveraged/inverse XRP futures ETFs fluctuated only in the short term. CMC data showed that XRP was quoted at $2.177 at 8:20 p.m. on April 27 and hit a short-term high of $2.2895 at 4:05 a.m., an increase of about 5%. As of noon on April 28, the price fell slightly to around $2.25, with an overall stable trend.
Crypto KOL Tuao Dashixiong commented that XRP leveraged/inverse ETF is a high-speed asset designed for short-term speculation, while BTC/ETH spot ETF is a slow-speed stable asset designed for traditional investors to steadily allocate digital assets. So in fact, this ETF cannot achieve a large inflow of funds.
In addition, ProShares also clearly reminded investors in its prospectus: The prospectuses of these three ETFs clearly warned in the original text: If held for more than one day, the returns may deviate significantly from the expected returns of the underlying index, so they are not suitable for long-term holding.
It is worth mentioning that XRPs position in the derivatives market is steadily rising. Not long ago, CME Group announced that it would launch XRP futures products on its derivatives exchange on May 19. CME is the largest derivatives exchange in the United States and has currently launched products related to Bitcoin (BTC), Ethereum (ETH) and Solana (SOL).
Later, Ripple CEO Brad Garlinghouse recognized CMEs upcoming XRP futures contracts, calling it an important and exciting step for the continued growth of the XRP market. However, he pointed out that although this move has lagged behind in many aspects, it is of great significance. It marks that XRP has been recognized by the mainstream financial market. This move not only provides professional investors with regulated trading tools, but may also pave the way for the launch of XRP spot ETFs in the future, verifying XRPs status as a mature and investable asset class.
At the same time, the worlds first spot XRP ETF was successfully listed in Brazil. On April 25, the worlds first spot ETF linked to XRP was issued by Hashdex and managed by Genial Investimentos and began trading on the Brazilian Stock Exchange B3. The ETF code is XRPH 11 and tracks the Nasdaq XRP Reference Price Index. According to Hashdex, the ETF will allocate at least 95% of its net assets to XRP.
In general, the three XRP futures ETFs launched by ProShares this time provide the market with more trading strategy options, especially for investors who focus on short-term, leveraged investments. However, from the perspective of medium- and long-term capital flows and value investment, the real focus is still on the final approval of the spot XRP ETF.
With the upcoming launch of CME XRP futures and the first listing of spot XRP ETFs in Brazil, XRPs acceptance in the global financial system has been further enhanced. In the future, if US regulators allow spot XRP ETFs, it may bring further progress.
