XRP ETF Challenges: GSR Analysis Highlights Obstacles

29 June 2024

in XRP

Reading Time: 3 mins read

GSR’s analysis shows XRP and Cardano face challenges with ETF adaptation.
CEO Ripple Brad Garlinghouse believes in an XRP ETF launch by 2025.

Though the market for cryptocurrency ETFs is growing, not all digital assets are ready for a smooth transition. Interestingly, GSR’s most recent research emphasizes how difficult the possible introduction of an XRP ETF is. As of writing, XRP is trading at $0.4759, up 0.18% over the last day but down 2.24% over the previous week.

The assessment methodology of GSR evaluates several cryptocurrencies for ETFs by combining market demand indicators and decentralization measures in a thorough scoring method.

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Examining GSR critically involves decentralization, which emphasizes features like permissionless participation and the variety of hardware in the networks.

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The Nakamoto Coefficient is an important metric in this study that indicates possible weaknesses to collusion or control by a few entities by measuring the concentration of operational power inside a network.

XRP and Cardano’s Low Scores

With regard to decentralization, XRP and Cardano performed noticeably poorly. With scores of -0.9 for XRP and -0.1 for Cardano, there are questions concerning the network architectures of both coins. This poor score on decentralization points to possible challenges for these cryptocurrencies in making the move to ETFs without incident.

Source: GSR

Equally important is demand potential, apart from decentralization. Using market capitalization, trading volume, and levels of community participation, GSR forecasts the demand in an ETF depending on each cryptocurrency.

In demand measures, XRP and Cardano, for all their popularity, scored -0.2 and -0.5, respectively, lagging behind other cryptocurrencies with more robust future market demand indicators.

Challenges in the ETF Launch

The lower decentralization and demand scores suggest that, particularly in a market that is changing and adjusting quickly, XRP and Cardano may have significant obstacles before their ETFs are released.

It is nonetheless noteworthy that Brad Garlinghouse, the CEO of Ripple, is still upbeat, and recently CNF reported that he is confident that an XRP ETF will be released by 2025.

While XRP and Cardano deal with these issues, GSR is giving more positive assessments to other cryptocurrencies such Ethereum, Solana, and NEAR. Their better demand and decentralisation ratings point to a more seamless route to ETF adaptation.