The new Cyber Hornet XRP ETF filing puts the focus on risk of manipulation by whales, which created a new wave of concern regarding the financial stability of the market and the investment safety of investors.
The issue of whale manipulation in the XRP market has been highlighted in a recent filing with the U.S. Securities and Exchange Commission (SEC) of an ETF.
The prospectus of Cyber Hornet S&P500/XRP ETF contends that big XRP investors (whales) are a formidable market player because they have the power to move the price with their huge transactions.
This is an institutional acknowledgment that is not common in the industry, with the majority of individuals appearing to reject the variability of XRP pricing to market and speculatory pressures.
Source – X
According to Bill Morgan, a lawyer who was monitoring the filing, the fact that an ETF applicant openly acknowledged this risk was important. He added that in the case that these risks are present, investors must be aware of them so they can make a well-informed decision.
Whale Control Casts Market Stability doubts.
The ETF prospectus uses structural risks associated with the structure of XRP. As opposed to Bitcoin or Ethereum, XRP was fully minted at its inception, and there is no production of new coins to keep up with the demand.
There are no mining or staking rewards which means that the validators do not have incentives based on new supply. These characteristics add to liquidity issues, and XRP is more susceptible to strong price fluctuations due to the actions of whales.
A small number of people own a significant percentage of XRP and therefore their selling decisions can greatly influence the prices in the market.
This brings about issues of price manipulation that can make the market less stable and more predictable to the retail investors.
The whale activity has already attracted regulatory attention to the XRP around the world. So, in certain jurisdictions, significant XRP transactions over 100 million dollars have been called to attention as possible market manipulation attempts.
These transactions are under observation by authorities due to the current controversy over the legal status of XRP.
Market Dialogue might be altered through institutional Spotlight.
The Cyber Hornet filing would be a tipping point of how regulators, investors and institutions perceive risks in crypto trading.
The fact that whale manipulation is institutionalized is another factor that puts pressure on issues that are frequently overlooked in the crypto world.
The remarks made by Morgan are important to note that ignoring the risk of whales is unwise amongst investors. The filing will potentially stimulate more openness and further deliberation of XRP market dynamics as ETF approvals and institutional interest ever-increase.
This open declaration of whale risk by Cyber Hornet becomes a precedent of future crypto ETFs to bring to the market actual challenges. This may also influence regulatory policies and investor policies in the future.
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