Per reports, Teucrium Investment Advisors is set to launch its first-ever XRP ETF in the United States.
Traditionally, when a new asset class enters the ETF ecosystem, issuers introduce simple spot funds that hold the underlying asset directly.
Teucrium appears to be flipping the script, and Eric Balchunas believes this development is "odd and maybe even a first”.
The Teucrium 2x Long Daily XRP ETF (XXRP) is designed to provide investors with twice the daily return of XRP's price performance.
If this ETF gains traction, it could pressure the SEC to fast-track its decisions on the other pending applications.
XRP investors have recently found some level of relief amid the ongoing bloodbath in the crypto market.
Per reports, Teucrium Investment Advisors is set to launch its first-ever XRP ETF in the United States.
This fund is expected to begin trading on the NYSE Arca today, under the ticker XXRP.
Here are the details of this development and what to expect from the cryptocurrency moving forward.
Traditionally, when a new asset class enters the ETF ecosystem, issuers start by introducing simple spot funds that directly hold the underlying asset.
These spot ETFs offer an easier way for investors to gain exposure to said asset without having to deal with any complexity.
The issuers then release leveraged ETFs only after these spot products establish themselves in the market.
However, Teucrium appears to be flipping the script this time around.
According to Bloomberg ETF analyst Eric Balchunas in a recent X post, “The fact that the first ETF for XRP is leveraged is very odd — maybe even a first.”
Odd but welcome ETF launch | Source: Twitter
Despite the unusual order of this launch, Balchunas is optimistic and predicts that a spot XRP ETF still has a high chance of approval in the near future.
This new XXRP product is designed to offer investors 2x leveraged exposure to the price movements of XRP.
As it stands, the launch is important, not just because it is the first XRP-based ETF in the country.
It is important because it is launching in a leveraged form, before a standard “spot” XRP ETF has even been approved.
As established, the Teucrium 2x Long Daily XRP ETF (XXRP) is designed to provide investors with twice the daily return of XRP's price performance.
This means that if XRP rises by 5% in a day, the XXRP is expected to rise by 10%.
The new ETF launch | Source: Twitter
In the same vein, it means that a 5% drop would result in a 10% decline in the ETF.
The ETF comes with a management fee of 1.85%, which is higher than many traditional ETFs charge but typical for leveraged crypto funds.
The XXRP is also expected to manage roughly $2 million in net assets at launch.
According to Teucrium in its promotional material, “If you have a short-term, high-conviction view on XRP prices, this ETF could be a useful tool.”
The new XXRP ETF | Source: Twitter
The question remains: Why Now? Why is Teucrium choosing to launch this product at this time?
To any investor, Teucrium’s timing would appear random.
However, the launch comes just weeks after Ripple Labs ended its four-year legal battle with the U.S. Securities and Exchange Commission.
The court ruling has brought some long-awaited clarity to XRP’s regulatory status, and with the case closed, issuers now have more confidence to launch XRP-related products.
In fact, Teucrium is not the only interested issuer in XRP ETFs.
Others like Grayscale, WisdomTree, Bitwise, 21Shares, Canary Capital, and Franklin Templeton currently have pending filings for spot XRP ETFs.
These proposals are still under review by the SEC. However, many industry speculators are highly optimistic.
According to Bloomberg analysts, there is now a 65% chance of spot XRP ETF approval this year.
This prediction is even higher on Polymarket, with the odds currently at 75%.
Despite the excitement, Teucrium has taken the time to warn investors about the risks.
In the official press release, the firm openly acknowledged the high volatility of XRP’s price.
It noted that XRP is unlike Bitcoin or Ethereum, where its adoption has been somewhat stagnant over the last few years.
Teucrium pointed to a decline in Ripple network usage, for example, noting that it could affect the long-term value of the cryptocurrency.
“Price swings can be dramatic and daily re-balancing in leveraged ETFs means long-term holding may not match investor expectations,” the firm explained.
This issue is a common one for leveraged funds, which are great for short-term trading and not long-term investments.
Interestingly, Teucrium sees the current market condition as an ideal entry point for the cryptocurrency.
According to Teucrium CEO Sal Gilbertie in an interview with Bloomberg, launching XXRP during a downturn could work in the fund’s favor.
“What better time to launch a product than when prices are low?” he said.
Gilbertie also hinted that Teucrium is working on more crypto ETFs in the future, which is a major shift considering the firm’s history of focusing on agricultural commodities like corn, soybeans, wheat, and sugar.
Overall, with Teucrium leading the charge for XRP ETFs, other issuers are likely watching to see how XXRP performs on the market.
If it gains traction, it could pressure the SEC to fast-track its decisions on the other pending applications.
An important thing to note from this point is that while regular spot ETFs are designed for unfamiliar investors, leveraged ones are not beginner-friendly.
Still, the XXRP remains great for investors who are bullish on XRP in the short term.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.