Analyst Projects XRP Price at Year-End

Institutional Demand Surge

Institutional demand for XRP is intensifying rapidly, with the emergence of spot Exchange-Traded Funds (ETFs) that are acquiring and locking up XRP in custody. This trend has the potential to significantly shrink the available supply of XRP, thereby driving its price sharply higher.

In a recent analysis, Arthur presented a compelling case, examining Canary Capital’s first-week holdings of 138,582,415 XRP, valued at approximately $281.8 million. He projected substantial inflows from major institutional asset managers, suggesting a scenario where Franklin Templeton, Grayscale, Bitwise, and 21Shares could allocate heavily, potentially absorbing 4 to 5 billion XRP into their respective ETFs.

According to a recent report, the U.S. Securities and Exchange Commission (SEC) has approved the Franklin Templeton XRP ETF. Franklin Templeton, an asset manager overseeing more than $1.5 trillion in assets, has updated its S-1 filing for a spot XRP ETF. The firm’s removal of delaying regulatory language signals an expedited launch. CoinDesk further reports that this ETF will custody XRP through Coinbase Trust and utilize the CME CF XRP-USD benchmark.

Meanwhile, prominent issuers such as Bitwise and 21Shares are also preparing to launch their spot XRP ETFs. This collective readiness among major asset managers significantly increases the probability of sustained, large-scale inflows into XRP.

XRP Supply Dynamics

XRP has a total supply of 100 billion tokens, but a considerably smaller portion is actively tradable on exchanges. Arthur’s analysis is predicated on the idea that ETF accumulation will effectively remove XRP tokens from active markets, thereby diminishing the liquid supply. This reduction in available supply could lead to a significant tightening of trading depth in secondary markets.

With potentially billions of XRP locked within ETF trusts, the pool of liquid XRP available for retail investors and exchange trading may contract dramatically. This shift in market structure could foster a structural supply squeeze, thereby intensifying upward pressure on XRP’s price.

Price Models and Scenarios

Arthur’s model outlines three potential price outcomes for XRP. In the base case, assuming consistent ETF inflows and typical retail trading activity, he projects XRP could reach $3.20 by the end of the year. In a more optimistic scenario, if major institutions fully engage with XRP ETFs, his projection suggests the price could rise to $5.00.

He further models an extreme bull case: if macroeconomic liquidity conditions remain favorable, ETF flows accelerate, and exchange withdrawals continue, XRP’s price could surpass $6. This model is fundamentally based on the arithmetic of supply reduction coupled with sustained demand.

Risks and Uncertainties

However, this optimistic outlook is not without its inherent risks. ETF inflows are not guaranteed and could be subject to redemptions, which would negatively impact XRP. Institutional trustees also carry counterparty risk. Furthermore, a broader downturn in the cryptocurrency market could reduce investors’ appetite for risk, affecting XRP demand.

Additionally, Arthur’s price projections are contingent on the assumption that Franklin Templeton, Grayscale, Bitwise, and 21Shares will all make significant yet conservative allocations. This requires strong conviction from these firms, sustained regulatory clarity, and continuous capital flow. Any hesitation from these key players could weaken the supply-lock argument.

In conclusion, the advent of the ETF era has the potential to fundamentally reshape XRP’s market structure. Arthur’s detailed analysis indicates that billions of XRP could be removed from circulation if asset managers such as Franklin Templeton, Grayscale, Bitwise, and 21Shares follow Canary Capital’s lead in accumulating the asset.

This projected supply compression, in turn, could drive XRP’s price towards the $5 mark by year-end. While uncertainties persist, the structural case for XRP’s price appreciation appears more robust and tangible than many might have anticipated.