Despite major US spot XRP products holding XRP below accounting cost, investors continued to buy in. Bitwise, Canary Capital, Franklin Templeton, 21Shares, and Grayscale collectively recorded $629.9 million in primary-market share creations against $309.1 million in redemptions in the first half of the year, leaving them $746.1 million below accounting cost.
The gap between the funds’ cost and fair value quantifies the unexpected demand for XRP ETFs, with net inflows reaching $1.8 billion across the asset class. Even though the combined XRP holdings of these funds were 44.1% below their accounting cost, capital activity remained positive.
Resilient XRP ETF Demand
Fair value across the five funds totaled $947.3 million on June 30, significantly lower than the $1.7 billion they had initially paid. Despite this decline, new creations surpassed redemptions, indicating strong investor interest.
Bitwise, Canary, and Franklin saw net inflows of $484.5 million, while Grayscale and 21Shares experienced a net outflow of $163.7 million. However, the overall figure remained resilient due to the positive inflows at three of the funds outweighing the outflows at the other two.
Analysis of XRP ETFs
The gap between the funds’ recorded XRP cost and fair value highlighted the discrepancy in the market. Despite the funds holding XRP well below their accounting cost, inflows continued to outpace outflows.
Looking ahead, the recovery of XRP prices will determine the fate of these funds. The bear case scenario could push the funds further below cost, while the bull case could bring them back to breakeven or above.
Overall, regulated XRP demand this year showcased conviction buying into a known loss, with the outcome dependent on future XRP price movements.
