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Chad Steingraber, a prominent figure within the XRP community and a seasoned game designer, recently argued the potential for a 100x premium on an XRP ETF.
In a recent post on X, Steingraber shared insights on the potential trajectory of an XRP exchange-traded fund (ETF) in light of institutional demand.
Notably, the XRP community has called for efforts from asset managers, especially BlackRock, in launching an XRP ETF. They anticipate positive impacts on the asset’s market value following the launch of such investment product.
Amid this optimism, Steingraber speculated on the outlook for the price at which the XRP ETF shares could sell. He speculated from the angle of XRP reaching an unprecedented price of $5.
XRP ETF Premium Could 100X
In particular, Steingraber theorized that if XRP broke a $5 price point, the corresponding ETF fund could similarly soar to unprecedented heights, potentially trading at a staggering 100x premium. Essentially, this outlook puts the ETF shares at $500.
The XRP community figure emphasized that such an expensive premium for an XRP ETF would be particularly feasible if more institutions become interested in the XRP investment product.
The actual underlying asset price does NOT have to skyrocket. The fund can trade at MASSIVE Premiums.
Let’s say #XRP breaks ATH @ $5, its ETF fund could literally trade at 100x premium if the institutional demand kicks in.
Yes, that’s right, a $500 #XRP Institution Premium. 👍 https://t.co/bwN6cGmmZd pic.twitter.com/tHyy4fkbeK
— Chad Steingraber (@ChadSteingraber) March 27, 2024
Meanwhile, Steingraber stressed that XRP’s market price itself may not necessarily need to skyrocket for the fund to experience exponential growth. He drew parallels with Grayscale’s investment product linked to Litcoin (LTC).
Steingraber pointed out that the Grayscale Litecoin Fund currently commands a significant premium over its net asset value (NAV).
Specifically, he noted that despite Litecoin’s market price of $95.82, institutions are paying a premium of $253.98 per Litecoin equivalent within the fund.
Essentially, the XRP community figure foresees an XRP ETF witnessing a similar high premium with surging institution interest.
Arbitrage Opportunity
In response to this viewpoint, X user Zack asked whether the projected expensive XRP ETF premium could be exploited through arbitrage by individuals holding the physical asset.
Chad Steingraber responded that if issuers permit In-Kind deposits, individuals can deposit the asset in exchange for the corresponding share value for arbitrage.
However, he noted that In-Kind deposits remain a big deal in the ETF market scene. Yet, Steingraber expressed optimism about the industry’s trajectory, hoping that such practices would become widespread sooner rather than later.
Overall, this outlook remains speculative as no asset manager has moved to apply for an XRP ETF despite constant calls for the investment product.
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