ETFs
Here’s why XRP and Cardano might not see the light of day in ETFs anytime soon – Report
Here’s why XRP and Cardano might not see ETFs
The field of cryptocurrency ETFs now appears to be expanding, but not all digital assets are ready for an easy transition to this financial product. The recent GSR analysis The potential of ETFs in various cryptocurrencies has brought to the forefront information that puts XRP and Cardano in a difficult position for Adaptation of ETFs.
Using a comprehensive rating system, GSR rates cryptocurrencies on a scale incorporating decentralization metrics and market demand indicators.
XRP and Caradano: Never seeing the ETF light?
Decentralization is essential, as it addresses aspects such as permissionless participation and the diversity of hardware used in networks.
Key indicators such as the Nakamoto coefficient measure the concentration of operational power within the network, revealing vulnerabilities to potential collusion or control by multiple entities.
For XRP and Cardano, decentralization scores were particularly low, with XRP at -0.9 and Cardano at -0.1, indicating concerns about their network structures.
Aside from decentralization, demand potential is equally important, considering market capitalization, trading volume, and community activity levels. These factors predict how much interest an ETF might generate for each cryptocurrency.
Despite their popularity, XRP and Cardano scored -0.2 and -0.5 in demand metricsplacing them behind other cryptocurrencies with stronger future market demand indicators.
This combination of lower decentralization and demand scores in GSR’s analysis suggests that XRP and Cardano could face substantial hurdles before seeing their ETFs launch, especially in a market that is rapidly adapting and evolving.
Meanwhile, contrary to the gloomy outlook for XRP and Cardan GSR ETFs and other cryptocurrencies like Ethereum, Solana, and NEAR are seeing more bullish valuations.
Spotlight on Solana and other approved ETFs
Notably, by merging asset ratings, GSR’s ETF Opportunity Score methodology assigns a weight of 33% to decentralization and 67% to demand in its overall scoring system.
Regardless, VanEck, a major player in the asset management field, has taken a pioneering step in First-Ever Solana Spot ETF Filed with the United States Securities and Exchange Commission (SEC).
The move highlights Solana’s growing stature as a notable competitor to Ethereum. According to Matthew Sigel, Head of Digital Asset Research at VanEck, “With its combination of scalability, speed and low costs, the Solana blockchain has the potential to provide an enhanced user experience across a wide range of business cases. ‘use. »
However, the Bitcoin and Ethereum landscape remains mixed. While Bitcoin spot ETFs have seen fluctuating inflows, the potential Ethereum ETF is still awaiting final S-1 approvals, which are expected to materialize soon.
The market has cautiously welcomed these developments, reflecting the slow pace of spot Bitcoin ETF inflows despite a positive trend in recent days.
Featured image of DALL-E, chart by TradingView