In a new video, Crypto Sensei explores XRP's potential, addressing the impact of ETFs on its price and possible capitalization multipliers.
The Multiplier Effect
The main argument of the video is that many, even in the crypto community, fundamentally misinterpret how ETF inflows impact asset prices, especially for XRP. When Bitcoin's Spot ETF was approved in January 2024, every dollar invested didn't just add a dollar to market cap but could add up to $25 due to the capital multiplier effect. According to the creators, this logic also applies to XRP but on a more exaggerated scale.
Unlike Bitcoin, XRP has much lower liquidity, making it more sensitive to large inflows of capital. For instance, it has been recorded that just $12 million in inflows caused XRP’s market capitalization to increase by more than $7 billion.
Future ETFs for XRP
The video also discusses the possibility of a XRP Spot ETF being filed in the U.S. Nate Geraci, a well-known ETF expert, hinted that major players such as BlackRock might be looking at XRP, especially following the SEC vs Ripple case's resolution. Although BlackRock hasn't filed anything yet, insiders believe it's just a matter of time. The infrastructure is nearly ready, and demand for XRP is increasing.
Hypothetical Scenarios for XRP
The multiplier is critically important as it changes how potential gains are viewed. It is commonly believed that $1 billion flowing into XRP would mean a $1 billion increase in market cap. However, if the true multiplier is 100x or even 200x, that same billion dollars could push the market cap to $100-200 billion. This type of shift could lead to a rapid increase in institutional interest once ETFs are approved.
Hypothetical scenarios illustrate that:
$5B — $500B Market Cap (100x) or $1T Market Cap (200x) $10B — $1T or $2T $25B — $2.5T or $5T $100B — $10T or $20T
In conclusion, Crypto Sensei made compelling arguments regarding the underestimation of XRP's potential. Even if predictions do not unfold exactly as envisioned, XRP remains an intriguing asset amidst numerous changes in the crypto market.
