Analysts are expressing concerns that XRP Futures could negatively impact XRP’s price. They caution that cash-settled futures may enable market manipulation, potentially causing a significant price drop, similar to historical patterns seen with Bitcoin (BTC) and Ethereum (ETH).
However, several experts argue that despite the potential for heightened volatility in the short term, these financial instruments can contribute to a more mature market in the long run. 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.
The Role of XRP Futures in Shaping Long-Term Market Dynamics
Meanwhile, Tracy Jin, COO of MEXC, believes that while price volatility may increase in the short term, XRP Futures could foster a more stable and mature market and facilitate efficient capital allocation.
“In the long term, XRP futures can contribute to more mature price dynamics through sophisticated trading strategies and risk management tools. As market participants gain confidence and access to structured products, price movements are expected to become more open to fundamental demand, regulatory progress, and macroeconomic factors,” Jin disclosed to BeInCrypto.
Dean Chen, an analyst at Bitunix, expressed a similar view. He stated that, in the long run, a well-established futures market offers hedging opportunities for spot holders while promoting price transparency and arbitrage.
This, in turn, will help XRP evolve into a more stable and liquid asset. Additionally, arbitrage activity plays a key role in reducing price manipulation.
“While initial phases may see heightened volatility due to speculative inflows, over the medium to long term, futures offer additional hedging and arbitrage mechanisms that contribute to a more stable market structure, reduced pricing inefficiencies, and improved overall market maturity and efficiency,” Chen told BeInCrypto.
The experts also remain optimistic that XRP Futures will increase liquidity and facilitate spot XRP ETF approval.
“XRP futures will likely enhance overall market liquidity, benefitting traders with additional tools to hedge risk, speculate, and engage in arbitrage strategies. Both retail and institutional participants may engage with these products, leading to tighter spreads and deeper order books,” Jin added.
Chen explained that this development could be a major catalyst for a spot ETF to receive regulatory approval. He emphasized that the SEC’s reluctance to approve such a product has been due to the lack of a regulated and mature futures market.
“If XRP futures are listed on regulated exchanges with sufficient trading volume, they can enhance the asset’s regulatory standing as an ETF underlying and provide fund managers with essential hedging tools, aligning with traditional financial standards. Furthermore, if the futures are regulated by the CFTC and exhibit strong price linkage with the spot market, this would increase market transparency and strengthen the case for ETF approval,” he said.
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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