This $15 Trillion Investment Giant Has No Plans to Launch an XRP ETF. That's Why I'm Bearish on XRP Right Now.
BlackRock offers spot ETFs for Bitcoin and Ethereum, but not for XRP. That's a problem for crypto investors.
Among crypto exchange-traded funds (ETFs), the clear leader is $15 trillion asset management giant BlackRock (BLK +0.64%). This firm offers both the largest spot Bitcoin (BTC +0.00%) ETF and the largest spot Ethereum (ETH -0.13%) ETF.
XRP (XRP -0.78%), which currently ranks as the world's fifth-largest cryptocurrency with a nearly $100 billion market cap, would seem to be a likely candidate for BlackRock's next spot crypto ETF launch.
Yet, BlackRock has never even filed an application with the SEC for a spot XRP ETF. This is despite the fact that seven different spot XRP ETFs already trade in the marketplace. So what's going on here?
The $1.77 billion question
Right now, those seven spot XRP ETFs have $1.77 billion in assets under management. So, there's obviously some demand for them among both retail and institutional investors. And several big names have gotten involved here, including Franklin Templeton (BEN +0.21%), Grayscale, 21Shares, and Bitwise.
Yet, BlackRock continues to ignore XRP. According to the firm, the No. 1 priority for launching a new fund is client demand. And right now, there simply isn't enough client demand to justify creating a new spot XRP ETF.
While $1.77 billion might sound like a big number, it's really not in the context of the firm's Bitcoin ETF, the iShares Bitcoin Trust (IBIT +1.74%). This ETF has $67 billion in assets under management. The iShares Ethereum Trust (ETHA +1.59%) also dwarfs the combined assets of the seven XRP ETFs, with $10 billion in assets under management.
Just two years ago, before the spot XRP ETFs launched, analysts were predicting that as much as $8 billion might pour into XRP. The amount of money they have attracted -- $1.77 billion -- is just a small fraction of that total. This suggests that analysts badly overstated potential investor demand for XRP.
Right now, XRP is trading at $1.50. It's hard to see how it could soar much higher unless there is a massive influx of new money. From what BlackRock has told the market about client demand for XRP, that's simply not going to happen anytime soon.
For that reason, I'm not buying XRP right now. It may have a market cap large enough to justify a closer look, but the demand simply isn't there. Until BlackRock starts buying XRP for its clients, I'm looking for better investment opportunities elsewhere.
