REX Shares’ New XRP and SOL ETFs to Launch Today. What Investors Need to Know?

In the dynamic realm of crypto markets, where innovation is the norm and new products are born daily to enhance investors’ returns, leveraged ETFs have increasingly become a popular choice among investors, both experienced and novice ones. The chance to increase gains on Solaba and Ripple just got easier with the launch of XRP and SOL ETFs. 

In a partnership with Tuttle Capital Management, REX Shares announced the T-REX 2X Long SOL Daily Target ETF (SOLX) and the T-REX 2X Long XRP Daily Target ETF (XRPK). The ETFs will provide traders with 2x exposure to Solana and XRP and will allow investors to double up on their positions in the two popular cryptocurrencies. However, there are certain risks to keep in mind when dealing with leveraged ETFs, especially if held for multiple days.

What Are Leveraged ETFs and How Do They Work? 

Leveraged ETFs (Exchange-Traded Funds) are designed to amplify returns for investors using financial derivatives like swaps and options. The new XRP ETF (XRPK) and Solana ETF (SOLX) aim to offer investors 200% exposure to their respective assets. If Solana or XRP are up 1% for a day, the ETFs in question are targeting a 2% return.

Key Features of the New XRP and SOL ETFs:

Double Daily Exposure: Both SOLX and XRPK offer 200% leveraged exposure to the daily price movements of Solana and XRP.

No Direct Investment in Spot Crypto: The ETFs do not directly hold spot SOL or spot XRP but use derivatives tied to their performance.

Fund Management: Both funds will be managed by Tuttle Capital Management and the annual management fee will be 1.5%.

Subsidiary in Cayman Islands: A portion of the assets will be invested in a wholly-owned subsidiary of the ETF in the Cayman Islands, with the excess invested in cash equivalents such as US Treasuries.

Why Solana (SOL) and Ripple (XRP) Are the Focus of These New ETFs?

The launch of these two XRP and SOL ETFs did not come as a big surprise because XRP and Solana are not only in the top five digital currencies by market capitalization, but they are also two of the most popular cryptocurrencies which have proven their worth and are outperforming other coins.

Solana (SOL): Solana is a high-speed and low-cost transaction-oriented blockchain platform that is swiftly building up its ecosystem as well as decentralized applications (dApps) network. SOL is growing rapidly in the DeFi sector. As the Solana blockchain grows further, crypto-focused ETFs can invest in the cryptocurrency.

Ripple (XRP):  XRP is the world’s most used cryptocurrency for cross-border payments. The Ripple network is used by many financial institutions, as it allows fast and cheap international transactions. The XRP cryptocurrency itself is used in the transactions. In this way, despite the on-going lawsuit between Ripple and the U.S Securities and Exchange Commission (SEC), XRP is an attractive investment for ETF investors who want exposure to the cryptocurrency.

The Risks and Rewards of 2× Leveraged ETFs

While leveraged ETFs can amplify returns, it’s important to be aware of the risk they introduce, especially in the highly volatile cryptocurrency market.

Volatility risk: Cryptocurrency prices can be highly volatile and prone to sudden and sharp price movements. When leveraged ETFs are applied to these assets, that volatility is magnified. So even a relatively small move in the underlying coin can result in a large gain or loss in the ETF.

Compounding effect: Leveraged ETFs are designed to deliver a multiple of the daily return of the benchmark they track. Over longer periods of time, especially in volatile market conditions, the effects of daily rebalancing and compounding can cause the performance of a leveraged ETF to diverge significantly from the overall move of the underlying cryptocurrency.

Short-term focus: Leveraged ETFs are generally intended for active traders who closely monitor markets and frequently adjust positions. For long-term investors, the combination of leverage, volatility, and compounding can result in a risk–return profile that is less attractive than unleveraged alternatives.

Conclusion: Should You Invest in the New XRP and SOL ETFs?

With the launch of the T-REX 2X Long XRP ETF (XRPK) and T-REX 2X Long Solana ETF (SOLX), traders can now access twice the daily price moves of two major cryptocurrencies through regulated exchange-traded products. These vehicles are intended for short-term, tactical trading; if held for longer than a day the effects of daily rebalancing and compounding can quickly destroy returns, particularly in choppy markets.

Due to the nature of leveraged ETFs, which magnify both gains and losses, strict risk management is required.. Position sizing, clear exit levels, and an understanding of how tracking works over multiple sessions are far more important here than in standard spot or non-leveraged ETF exposure.

Whether XRPK or SOLX belongs in a portfolio depends on a trader’s objectives and risk tolerance. For active participants who understand crypto volatility and the mechanics of leverage, they offer a focused way to express a view on XRP or Solana. For investors seeking long-term exposure, simpler spot or unleveraged products will usually be more appropriate.

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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments are highly volatile and risky. Always conduct your own research and consult with a qualified financial advisor before making any investment decisions.