Key Takeaways
- XRP is suffering heavily from a continuous bearish momentum.
- The delay in institutional investment is a key reason behind the bearish trend.
- XRP is well below the 50-day and 200-day EMA(Exponential Moving Average).
- ETFs could resurrect XRP.
- Franklin Templeton, alongside Bitwise and Canary Funds, is trying to convince the SEC to make ETF market entry easier.
XRP had an epic fall on the 4th of November alongside industry majors like Bitcoin and Ethereum. Even though several reasons contributed to the downfall, one of the major reasons was the economic downturn that came as a result of the US government shutdown and other macroeconomic factors like the Federal Reserve’s hawkish tone on interest rates.
There is, however, hope for XRP to make a comeback through ETF(Exchange Traded Funds) launches and the associated momentum it generates. This ETF market entry could potentially help XRP climb back up from its present bearish territory. Franklin Templeton’s attempt to convince the SEC regarding certain policy changes is key in this situation.
Involvement of Franklin Templeton and Canary Funds in ETF Launches
Key news regarding the ETF entry and the associated momentum it could generate largely revolves around the involvement of Franklin Templeton. This global investment management firm is a reputable name in the finance sector.
A backing for XRP from Franklin Templeton could boost the potential of the asset by a huge margin. In essence, this attempt by Franklin Templeton, together with Bitwise and Canary Funds, aims at convincing the SEC(Securities and Exchange Commission) to drop certain language from a document regarding the creation of ETFs.
This specific language is named “delaying amendment”. The specific language of delaying amendment gives the SEC a power over the release of new ETFs, as they can use the language to delay the launch of spot ETFs into the market.
The removal of this language has many effects on the market, and Franklin Templeton’s involvement is key here. The SEC cannot just ignore the suggestions put forth by a major finance company situated in the US. Franklin Templeton has suggested a removal of the delaying amendment, which could facilitate the smooth entry of ETFs into the market.
With the delaying amendment out of the way, ETF issuers can launch the ETFs right after a 20-day waiting period. This is a significant bypass to the red tape and regulations that had previously stagnated the smooth entry of ETFs into the market.
Impact of The US Senate Stalemate
The 35 days of the US government shutdown mark it as the longest ever stalemate in the history of America. Many government agencies of which include the SEC, are non-operational or partially operational at the moment. The SEC has been struggling to keep pace with their load as they are heavily understaffed.
All of this impacts the entry of ETFs into the market, which is a key factor for the prices of XRP to be boosted. ETFs are backed by institutional investors. This brings in high liquidity and credibility to the asset.
A delayed ETF entry can cause the prices to dip as investors will speculate that they will never be launched and will pull out of the market, causing major liquidity drops. Additionally, the institutional investments, which could have increased the liquidity, are also delayed, making the market volatile and the prices unpredictable. This unpredictability raises concern among investors, and soon fear will creep into the market, delaying further progress of the price.
Technical Overview of XRP Price
XRP had a drop on Tuesday of 4.5% from its daily open. The key technical factor to note here is that Tuesday’s drop was after the 8.5% drop on Monday, a day before. With two consecutive drops rattling XRP’s position, the launch of ETFs has become more than an action but a necessity.
Even though these drops had their effects shared from the broader cryptocurrency market crash, XRP cannot afford such losses at a time like this, when they are in a strategic position to be adopted into mainstream finance by global fintech giants.
After a loss totalling 11.84% in October, XRP is trading well below the 50-day and 200-day EMAs(Exponential Moving Averages). This significant bearish signal is a bad sign for XRP’s institutional adoption. So XRP is in dire need of a restorative force like the ETFs. With the ETF launches being delayed further than what was expected due to the government shutdown and the technical signals working against XRP, it seems that XRP’s recovery will become more difficult.
Conclusion
XRP is indeed in need of a push that only the ETFs can provide at the moment. If Franklin Templeton can succeed in convincing the SEC regarding the abandonment of the “delaying amendment”, this could become a reality.
The ETF entry into the market could generate a positive momentum that can raise XRP over the technical indicators that are currently signalling a bearish outlook. There are factors outside those discussed here that are causing a dip in XRP’s stability. However, institutional investment can largely help the asset regain its lost liquidity and bounce back on track.
Also Read: XRP News Today: XRP is 5% Down Today, Below Its Resistance Level $2.25.