The potential for Exchange-Traded Funds (ETFs) tied to XRP, the Ripple-linked cryptocurrency, continues to be a hot topic within the financial and crypto communities, marked by intense debate over institutional demand and the likelihood of regulatory approval. While some analysts initially downplayed the prospects, a growing chorus of experts suggests that demand for spot XRP ETFs is being significantly underestimated, drawing parallels to the early skepticism surrounding Bitcoin and Ethereum ETFs.

Bloomberg senior ETF analyst Eric Balchunas clarified earlier remarks, stating that Bloomberg never claimed there was no demand for XRP. However, he noted that assets further from Bitcoin naturally see less demand. Despite this, data points to substantial interest: Chicago-based CME Group's regulated XRP futures rapidly surpassed $1 billion in open interest in less than four months, setting a record for the fastest contract to do so. Moreover, futures-based XRP ETFs have quickly garnered over $800 million. These figures lead Nate Geraci, President of NovaDius Wealth Management and a prominent ETF observer, to assert that investor demand for spot XRP ETFs is being "badly misread" and severely underestimated, echoing the initial underestimation of Bitcoin and Ethereum ETFs. Canary Capital CEO Steven McClurg further bolstered this optimistic view, predicting that XRP ETFs could attract $5 billion in inflows during their first month, citing XRP as the second most recognized cryptocurrency on Wall Street after Bitcoin. Conversely, cryptocurrency analyst Adriano Feria presented a dissenting opinion, predicting that the launch of spot XRP ETFs would mark "the beginning of the end" for the token by exposing a lack of actual institutional demand.

The regulatory path for spot XRP ETFs remains under close scrutiny. The U.S. Securities and Exchange Commission (SEC) has, as is standard practice, repeatedly delayed its decisions on various spot XRP ETF proposals, with the most recent postponement occurring on August 18. Despite these delays, market sentiment overwhelmingly expects spot XRP ETFs to receive approval this year. Bloomberg analysts have previously indicated high odds for approval in 2025, a sentiment echoed by Polymarket bettors who place the chance of approval in 2025 at 82% (and even 86% in another analysis). The SEC's table is currently full, with 92 crypto ETF filings awaiting decisions, including seven for XRP and eight for Solana. Notably, WisdomTree, a significant manager, recently saw its XRP ETF decision pushed back on August 25, with other heavyweight managers filing amendments with October deadlines, signaling a busy fall for crypto market approvals. There are a total of 15 pending XRP ETF applications from various issuers.

Amidst the speculation, new and innovative ETF proposals are emerging. Amplify Investments has submitted a filing for an XRP ETF designed to offer investors exposure to XRP's price while generating income through options selling. This fund will not directly hold XRP; instead, it will invest in other ETFs that track the token's spot price. It plans to sell call options on these underlying XRP ETFs, typically set at up to 10% above the current price. This strategy allows investors to earn income from the option premiums, which also serves to cushion potential losses during sharp market downturns. However, this structure caps potential upside gains at the strike price if XRP experiences a significant rally. Risks associated with this type of ETF include general investment risks and XRP-specific risks such as high volatility, potential supply shocks, and network vulnerabilities. Currently, the U.S. market only offers leveraged or futures-based XRP ETFs, such as Teucrium 2x Long Daily XRP ETF and ProShares Ultra XRP ETF. However, a wave of spot XRP ETFs from issuers like Franklin Templeton, Bitwise, 21Shares, and Grayscale are widely anticipated to be approved later this year.

While smaller players are actively pursuing XRP ETF approvals, major financial institutions like BlackRock and Fidelity have notably refrained. BlackRock has reportedly ruled out filing for an XRP ETF, confirming no intention to launch one. This decision is significant, given BlackRock's iShares Bitcoin Trust ETF (BTC) and iShares Ethereum Trust ETF (ETHA) account for the majority of inflows into Bitcoin and Ethereum ETFs. Similarly, Fidelity, the second-largest player in the crypto ETF sector, has not filed for an XRP ETF, even after pursuing a Solana-based one. The absence of these giants raises questions, yet the continued filings from other firms suggest a robust belief in the market's potential, with analysts like Geraci maintaining their conviction based on historical patterns of underestimation in the crypto ETF space.