SUMMARY

• XRP’s price dropped by 10% as regulatory uncertainty dampened the optimism around ETF developments.
• The call-put skew indicates concerns over a prolonged price decline.

XRP’s options market reflects developing concerns about a continued price decrease, as regulatory instability dampens optimism following Bitwise’s ETF filing. On Monday, Bitwise submitted an S-1 form to the U.S. Securities and Exchange Commission (SEC), proposing an exchange-traded fund (ETF) that would invest in XRP. Bitcoin and ether ETFs, which launched prior this year, racked in billions of dollars in investor interest, raising hopes for comparable success with XRP. However, the SEC rapidly filed an appeal, challenging Judge Analisa Torres’s recent ruling that Ripple Labs did not violate securities regulations in its programmatic sales to retail exchanges.

This legal fight stems from the SEC’s 2019 charge against Ripple for offering unregistered securities after the platform sold $1.3 billion worth of XRP. Ripple, a fintech firm aiming to construct a worldwide payments network, employs the use of XRP as an independent digital resource for online payments and currency swaps. Being classified as a security is seen as a bearish signal for the crypto market, as securities are subject to stricter regulation and reporting prerequisites. As a result, XRP’s value has fallen by 11% to 53.7 cents in the past 24 hours, leading to a week-to-date loss of over 16%. Concurring to CoinDesk and Coingecko, this makes XRP the third worst-performing cryptocurrency among the top 100 by market value. In comparison, bitcoin and ether have dropped by only 0.5% and 3.7%, respectively.

Options traders on Deribit have taken a more bearish position on XRP than on bitcoin and ether, as evidenced by the seven-day call-put skew. At the time of writing, XRP’s skew was -3.2%, showing a inclination for puts, which offer protection against price drops. In contrast, bitcoin and ether’s skews stood at 0% and 2.8%, respectively, showing a more neutral or bullish viewpoint for those cryptocurrencies. Meanwhile, XRP’s funding rates in the perpetual futures market turned positive, reversing a brief bearish flip, and proposing some improvement in sentiment.

XRP’s price decrease and regulatory instabilities highlight the challenges confronting the cryptocurrency. Whereas the Bitwise ETF filing sparked initial positive thinking, the ongoing legal fight with the SEC continues to weigh intensely on XRP’s future, casting questions on its market performance and long-term viewpoint. As the case develops, traders stay cautious, and XRP’s position in the broader crypto scene remains questionable.