Analysts are raising concerns that XRP Futures can undermine XRP’s (XRP) price. While some view it as a step toward mainstream adoption, others warn that the cash-settled futures could pave the way for market manipulation, potentially leading to a significant price drop similar to historical patterns observed with Bitcoin (BTC) and Ethereum (ETH).
This debate arises amid the Chicago Mercantile Exchange (CME)’s launch of XRP futures contracts on May 19.
How Will XRP Futures Impact The Price?
In a recent post on X (formerly Twitter), an analyst using the pseudonym Pumpius warned that XRP Futures could be a “trap.” He stressed that these financial instruments allow large players to manipulate the price using strategies such as naked shorting and rehypothecation.
“You wanted legitimacy. Wall Street gave you leverage. It’s the same playbook used to manipulate gold and silver for decades. No need to dump coins. Just flood the system with phantom contracts, suppress the price, and profit from the decay,” Pumpius posted.
The analyst explained that in naked shorting, institutional players can open massive short positions on XRP without owning the tokens themselves. This creates artificial sell pressure, which can suppress the price.
Moreover, he noted that whales usually time their short positions around CME futures expirations. This, in turn, leads to a price decline while allowing them to book a profit. He used Bitcoin as an example, highlighting that it typically declined about 2.3% around previous CME futures expirations.
“Now apply that to XRP: Each CME expiration becomes a potential bear raid window. Smart traders will start watching CME calendars more than charts,” he added.
In addition to naked shorting, the analyst also discussed rehypothecation. In this practice, one XRP deposit can back multiple short positions, further amplifying the leverage in the market.
This could lead to additional hidden pressure on the price, as the visible supply of XRP remains unchanged while the leverage behind these positions multiplies. These combined strategies suggest that XRP’s price could experience significant drops, particularly around futures expirations.
“Naked short selling is legal in futures. Rehypothecation is legal in traditional finance. Dark pool trading and borrowed liquidity are standard institutional tools. So when XRP volatility spikes near futures expiry, it won’t be random. It’ll be precision finance, disguised as market behavior,” Pumpius claimed.
Historical data support these concerns. Another analyst, AJ Sallen, revealed that when the CME introduced Bitcoin futures on December 18, 2017, BTC’s price initially surged to $19,783. Nonetheless, it plummeted to $13,800 by December 22, marking a 30% decline.
A similar pattern followed the launch of CBOE Ethereum futures in 2018, with prices dropping sharply.
“Futures enabled shorting, and profit-taking after the hype caused a correction,” Sallen stated.
Despite these concerns, many remain optimistic that XRP Futures will increase liquidity and pave the way for a spot XRP ETF approval.
“CFTC-regulated contracts on XRP. Spot XRP ETFs only a matter of time,” Nate Geraci, President of the ETF Store, commented.
For now, XRP’s price hasn’t suffered any major decline. BeInCrypto data showed that the altcoin rose 2.1% over the past day. At press time, XRP’s trading price was $2.3.
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