A new ETF application for the US Securities and Exchange Commission (SEC) has marked whale manipulation as a clear risk in the XRP market. The Cyber Hornet S&P500/XRP ETF Prospectus notes that a small number of large holders control a lot of the stock of XRP. Their transactions can influence prices and reduce market stability.
Lawyer Bill Morgan said the application is considerable because an institutional applicant has a risk that is often set aside in crypto circles. Many traders point to wider market forces or speculation to explain sharp movements. But Morgan argued that if an ETF sponsor shows whale activity in a formal SEC document, it must be treated as a real concern.
The submission of the structural risks of XRP also detailed. Since the entire supply has been created during the launch, XRP cannot expand to meet the rising demand. Without rewards or rewards, Validators secure the network without a new issue. This setup makes XRP different from assets such as Bitcoin and Ethereum, but it also contributes to liquidity challenges and volatility.
By identifying whale manipulation as a material risk, the ETF entry can influence how regulators, institutions and investors approach cryptomarkets. It could mark a step towards a greater transparency and a more open discussion about the reality of trading digital assets.
“If an institutional applicant for an EFT recognizes the risk of whale manipulation, it must be considered a real risk. Personally if people are not willing to recognize the possible risk of some market manipulation in crypto, I wonder if they should invest in space at all,” Morgan said.