Wall Street may be preparing for a crypto rotation no one saw coming: a leading investor expects a spot XRP ETF to pull in up to $5B in its first month—potentially outpacing Bitcoin’s blockbuster debut and leaving Ethereum behind. Whether or not that number hits, the signal is clear: institutional attention could shift, spreads could widen, and liquidity in major pairs may be repriced around an XRP catalyst.

What’s happening

Steven McClurg, CEO of Canary Capital, projects that an XRP spot ETF could attract roughly $5B in first-month inflows—more than the initial wave seen in Bitcoin ETFs (~$3.3B) and far above the early net outflows around Ether ETFs. He argues XRP is the most recognized crypto on Wall Street after Bitcoin. ETF applications are under regulatory review, with a key decision window highlighted for October 2025.

Why it matters to traders

ETF launches aren’t just headlines—they redirect flows, change liquidity profiles, and alter correlations. If institutions allocate to an XRP ETF: - BTC and ETH dominance could temporarily soften as capital rotates. - XRP volatility may rise into the decision window and around launch. - Perp funding, spot-premium/basis, and options skew on majors could reprice. - ETH vehicles (including legacy trusts) may see outflows if rotation materializes.

Risks and timelines to respect

- Approval risk: The SEC timeline can shift; delays or denials can unwind pre-positioning. - Flow fragility: Headline inflows don’t guarantee sustained demand; net flows can reverse after initial hype. - Execution risk: Creation/redemption mechanics, authorized participants, and fee structures impact real trading spreads. - Macro overlay: Rates, dollar strength, and liquidity conditions can override crypto-specific catalysts.

Actionable setups to consider (with defined risk)

• Event-driven positioning: If implied volatility is cheap vs. expected headlines, consider options to express directional or volatility views rather than naked spot leverage.
• Relative value: Monitor XRP/BTC and XRP/ETH trend strength; use tight stops and avoid over-sizing into binary regulatory dates.
• Flow-following: If an ETF is approved, track daily creations/redemptions and AUM to gauge whether demand accelerates or fades after week one.
• Basis and funding: Watch perp funding and spot-futures basis for dislocations to fade; dislocations often normalize after launch-day extremes.
• Risk controls: Predefine invalidation levels, cap leverage, and use bracket orders; avoid chasing gaps on thin liquidity.

Metrics to watch

- Regulatory filings: 19b-4 approvals and S-1 effectiveness; exchange listing notices (Cboe/Nasdaq/NYSE). - Primary market data: Daily creations/redemptions, AUM growth, management fees, and AP participation. - Market microstructure: XRP spot depth, spread width across top venues, and cross-asset correlations with BTC/ETH. - Derivatives: Implied vs. realized volatility, skew, and funding regimes around catalyst dates.

Bottom line

A credible $5B month-one projection puts XRP into the center of the next ETF narrative. Even if actual flows undershoot, positioning ahead of a binary catalyst will shape crypto market structure. Trade the setup—not the headline—by focusing on flows, volatility, and risk-defined structures.

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