XRP now stands out as the biggest altcoin contender that could receive the greenlight ahead of others for a spot exchange-traded fund (ETF) approval by U.S. regulators. Optimism is soaring amid an incredible 30% price rally following last week’s outflow. On top of that, U.S. trading volumes are on the rise, and market dynamics are getting better. With the recent approval of a leveraged XRP ETF, there has been a fervor in the market. At the same time, a sharp increase in XRP’s share of spot volume on U.S. exchanges is adding to positive sentiment.

Increasing Trading Volumes and Market Depth

XRP’s share of spot volume on U.S. exchanges has surged to near 20%. This increase is a strong indication that the level of investor interest and market participation is growing. A new leveraged XRP ETF— with the ticker XXRP —just debuted on the New York Stock Exchange. This much anticipated announcement has sent trading volumes for the crypto token soaring in the U.S.

As previously reported by Kaiko, XRP boasts the highest 1% market depth out of any altcoin. That’s a sign of healthy liquidity, which allows traders to incur less price slippage. This considerable market depth makes XRP comparably appealing as a promising ETF underlying asset.

Market Sentiment and ETF Prospects

Polymarket punters are betting big on the approval of an XRP ETF this year. Today, they’re predicting the odds at 78%. This bullish sentiment is indicative of increasing confidence in XRP’s regulatory prospects.

"This underlying markets improving dynamics and the launch of the [XXRP ETF] last week position XRP ahead of other assets when it comes to approval." - Kaiko

Deribit traders are playing it more conservative ahead of CPI. Their bets indicate that XRP will not trade above $2 in April and May. This rift in sentiment shines a light on the fickle nature of XRP’s price movements and the uncertainty surrounding its future.

Regulatory Landscape and Future Outlook

Investment manager Grayscale filed to introduce a U.S. spot XRP ETF back in February. This move shows just how intense the institutional interest is in developing regulated investment vehicles which offer exposure to XRP. XRP's consensus mechanisms, similar to Bitcoin's, and its shared characteristics with commodities could potentially ease its path toward approval as a spot ETF.

"Since this leveraged ETF relies on returns from European ETPs and swap agreements to guarantee twice the daily returns of XRP, it’s hard to see how a spot product is more risky and therefore diminishes most arguments for denying these applications." - Kaiko

The CME Group not having a futures market for XRP is arguably the most damning consideration. This absence creates a lack of hedging opportunities for institutional investors. The SEC's decision to drop its case against Ripple in March has positively impacted XRP's price and overall market sentiment.

"While crypto is just a tiny fraction of market activity in the US, pressing deadlines might push it to the forefront for the new chair." - Kaiko

Additionally, expanding market volatility due to macroeconomic issues will almost certainly have an impact on XRP’s price trajectory. Beyond that, how the newly launched leveraged XRP ETF performs will be a major factor. According to JPMorgan, XRP ETFs might attract $8 billion in new capital from investors during their first year. This speaks to the robust anticipated market demand for these products.

"This is likely linked to broader market uncertainty at present due to macroeconomic concerns." - Kaiko