If you're thinking about investing in XRP (XRP -1.60%), there's one date that you need to circle on the calendar: Oct. 18. That's when the Securities and Exchange Commission (SEC) is scheduled to start considering approval for a batch of new spot XRP exchange-traded fund (ETF) applications that have been in the pipeline for months now.
If all goes according to plan, the imminent launch of new spot ETFs in October could send the price of XRP soaring. If that happens, XRP would have a legitimate chance of hitting a new all-time high above the $4 mark by the end of the year.
Countdown to the launch of new ETFs
This summer's resolution of the long-running SEC case against Ripple, the company behind the XRP token, has opened a new window of opportunity for XRP. As long as that case was in limbo, there was little likelihood of the SEC approving anything for Ripple. But in August, the two sides finally settled, bringing to a closure one of the most-watched cases in the crypto industry.
Image source: Getty Images.
In practical terms, the resolution of the case means that XRP -- currently the fourth-largest cryptocurrency in the world -- is now ready to join a very select club of cryptocurrencies that have their own spot ETFs. Right now, the only members of that club are Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH), but XRP could be the next.
Currently, there are six different spot XRP ETF applications that could receive approval in October. First up is a spot XRP ETF from Grayscale, scheduled for a decision on Oct. 18. That's followed by a series of decisions scheduled for 21Shares, Bitwise, Canary, CoinShares, and WisdomTree (NYSE: WT).
The SEC has already shown a willingness to accept a new streamlined process for crypto ETF applications. That, combined with the overall pro-crypto agenda of the Trump administration, makes it a near-certainty that at least one of these applications will receive approval. In fact, Bloomberg gives them a 95% chance of approval, and online prediction markets give them a 99% chance of approval.
Potential price impact
The big question, of course, is what type of price impact these new spot XRP ETFs could have. To answer that question, investors do have one important data point: the recent launch of the Rex-Osprey XRP ETF (NYSEMKT: XRPR) on Sept. 18.
While this new ETF is not a traditional spot ETF, it does give investors "spot exposure" to XRP. Confused? So are many investors. That's because the ETF achieves "spot exposure" via financial derivatives and an offshore subsidiary that buys XRP for the ETF. In the week since the launch, the ETF has dropped in price from $25 to $23. That's not very encouraging.
However, XRP bulls instead point to the launch of the spot Bitcoin ETFs in January 2024. That launch kicked off a massive rally in the price of Bitcoin and attracted the attention of large institutional investors. While smaller retail investors might only be able to invest thousands of dollars into these ETFs, large institutional investors can invest millions of dollars.
That's why it's worth watching fund flows from institutional investors into XRP. Every week, CoinShares releases updated numbers about institutional fund flows into crypto, and these can give you a good clue of what investors think about a particular cryptocurrency.
Unfortunately, the numbers for XRP are mixed at best. Yes, over $1.5 billion has flowed into XRP this year. But it's nowhere near the $12.5 billion that has flowed into Ethereum or the $25 billion that has flowed into Bitcoin.
Other October catalysts
The launch of the new ETFs alone might not send the price of XRP soaring. But there are other events occurring at the same time that could help to catalyze an upward move in XRP.
One is the possibility of a further rate cut by the Federal Reserve in late October. Anticipation of another Fed rate cut, combined with the imminent launch of new spot XRP ETFs, might be enough to give XRP a jolt of new momentum.
Moreover, October has historically been a good month for crypto. It's when Bitcoin typically begins its year-end rally. Given Bitcoin's historical role as the market bellwether, it's typically good news for altcoins such as XRP when the price of Bitcoin starts rising.
For that reason, it's worth keeping an eye on XRP over the next few months. While it's currently trading for just $2.75, there's plenty of fuel left in the fuel tank for another big rally to the $4 mark.
