This week, Bitwise registered a trust entity called “XRP ETF” in Delaware. The following day, the asset manager filed an S-1 form with the US Securities and Exchange Commission, a necessary step for companies aiming to launch a new security and list it on a public stock exchange.

As a result, the optimism surrounding a potential XRP ETF has triggered a dramatic increase in the crypto asset’s on-chain transaction volume.

Market Risks Amid Rising XRP Enthusiasm

The volume reached $2.39 billion, the highest level seen in eight months, according to crypto analytic platform Santiment’s latest insight. This suggests increased trader activity and possible institutional accumulation.

The latest data reveals that XRP’s 30-day MVRV (which measures the average returns of traders over the last 30 days) has dropped to -9.2%, the lowest level in two months. Historically, such negative sentiment and poor returns may indicate an “opportunity zone” where the market is under stress, but the downside risk is reduced. This is often a point where experienced investors begin to accumulate, expecting a recovery as sentiment improves.

Strengthening the bullish outlook, October 1st saw 145 whale transactions surpassing $1 million, the highest in six months. This uptick in whale activity suggests that larger investors are either accumulating XRP or preparing for a strategic move. Such large-scale transactions often foreshadow market shifts and can serve as a key signal for smaller traders watching for direction.

Social media sentiment surrounding XRP has turned strongly bullish, with the ratio of positive to negative comments reaching its highest point on October 1st, following news of Bitwise’s ETF filing and prior to the ETP one.

Despite a notable shift towards bullish enthusiasm for XRP in the market, Santiment warned that markets often move counter to crowd sentiment, especially when enthusiasm runs high.

“Price-wise, the initial hype pushed XRP’s value up, but as seen in the past with Bitcoin and Ethereum ETFs, enthusiasm can be short-lived if prices tank after the initial announcements, the SEC’s decisions on the filings get delayed, or actual adoption does not meet investor expectations.”

Despite whale activity, increased transaction volume, and negative average returns suggesting a potentially bullish outlook, the anticipated rally might not occur until market optimism fades and traders experience frustration or impatience. Ironically, the price surge traders are waiting for may only materialize once crowd sentiment cools down.

Ripple Prepares for SEC Appeal

The filing also comes at a delicate time for XRP and Ripple. On Wednesday, the SEC announced its intention to appeal a federal judge’s decision in the ongoing case against Ripple.

Over a year ago, the judge ruled that while the San Francisco-based blockchain company’s institutional sales of XRP breached federal securities laws, its programmatic sales to retail exchanges did not. The SEC’s attempt to file an interlocutory appeal against the summary judgment was rejected by the judge.