Previously, we explored the detailed analysis of JPMorgan, which estimated that the XRP Exchange Traded Fund (ETF) could attract $4-8 billion in the first year. According to that report, this figure was derived from its possible adoption and the performance of the Bitcoin (BTC) and Ethereum (ETH) ETFs.
Basically, the Bitcoin ETF attracted $108 billion in its first year of trading, representing 6% of its total market cap, while the Ethereum ETF had an inflow that accounted for 3% of its market cap. Applying a similar concept, the bank estimated that XRP could deliver at least $4 billion, as highlighted above.
Why Does This Matter?
Using the market cap multiplier model and the XRP ETF projection by JPMorgan, a popular analyst identified as Zach Rector has predicted that XRP could hit $15. To be much more cautious and realistic, Rector used the lower point of the estimated inflow range, which is $4 billion, in his analysis. He also used other models to measure how the price of the underlying asset could be propelled by the inflows.
Highlighting the direct impact of inflows on market cap, Rector cited an incident on April 12 when $12.87 million in inflows added a whopping $7.74 billion to XRP’s market cap. Fascinatingly, this occurred in just eight hours. Technically, the analyst explains that this represented a 601X multiplier. In other words, the $12.87 million inflow increased by 601 times to reach the added market cap.
Back to the main analysis, Rector believes that using a 200X multiplier for the $4 billion estimated XRP ETF inflow could be a conservative approach. In this case, the asset could add a market cap of $800 billion in the first year of its ETF trading. Adding this to the current market cap of $125 billion implies that the asset would have a total valuation of $925 billion.
To obtain the estimated price of $15, Rector divided the $925 billion projected market cap by the circulating supply of 60 billion tokens. Mathematically, this would mark an impressive surge of 597% from the current level.
Explaining the efficacy of his model, Rector admitted that there could be limitations. According to him, the model fails to consider future markets and trading activities on the Decentralized Exchange on the XRP Ledger (XRPL). Per his observation, this could equally impact inflows.
Amidst the backdrop of this analysis, the first XRP ETF recently made a groundbreaking entry into the market and recorded $5 million in volume on its debut. As mentioned in our previous article, Teucrium’s 2x Long Daily XRP ETF is meant to “deliver twice the daily returns of XRP via a swap agreement.”
XRP is also expected to record another historic milestone on April 16 and April 21, which could also have a greater impact on the price, as highlighted in our previous coverage. At press time, the asset was trading at $2.1 after surging by 15% on its weekly chart.