Evaluating the Performance and Dividend Strategy of Leveraged XRP ETFs

The 2x XRP ETF (XRPT) has emerged as a high-conviction vehicle for investors seeking amplified exposure to XRP’s price swings. Designed to deliver twice the daily performance of XRP through leveraged futures contracts, XRPT’s July 2025 return of 56.5% starkly outperformed the 4.8% average for the Trading–Miscellaneous category [3]. However, its volatility and risk profile demand rigorous scrutiny, particularly in a regulatory landscape still evolving for XRP.

Volatility and Risk-Adjusted Returns

XRPT’s leveraged structure inherently amplifies both gains and losses. While the fund’s beta of -1.29 suggests it is less correlated with broader market movements [3], its reliance on daily compounding means long-term returns may diverge significantly from the 2x target. For instance, a 10% drop in XRP followed by a 10% rebound would result in a 19% net loss for XRPT, underscoring the compounding drag inherent in leveraged ETFs [2].

Despite its strong July performance, XRPT lacks historical Sharpe ratio data due to its recent launch in May 2025 [5]. This absence of risk-adjusted return metrics complicates assessments of its efficiency. The fund’s 0.94% net expense ratio (reduced from 1.85% via fee waivers) [1] adds to the cost burden, particularly in volatile markets where frequent rebalancing is required.

Regulatory and Market Dynamics

The SEC’s 2025 ruling classifying XRP as a commodity in secondary markets has reshaped its ecosystem. This decision spurred institutional adoption, with CME Group’s XRP futures reaching $7.5 billion in open interest [1]. However, global regulatory uncertainties—such as the EU’s MiCA framework—persist, contributing to price volatility. For XRPT, this means exposure to both regulatory-driven tailwinds and sudden liquidity risks.

Dividend Strategy and Income Potential

XRPT’s dividend strategy reflects its leveraged nature. While it declared a $0.0128 per share dividend on August 26, 2025 [2], its yield remains at 0.00% due to sporadic distributions. The fund’s focus on derivatives and cash equivalents [5] limits traditional income generation, making dividends a secondary consideration for investors. Projections suggest future payouts could range between $0.0071 and $0.0185 per share, but these remain speculative [4].

Conclusion

XRPT’s performance highlights the allure of leveraged XRP exposure in a bullish environment, but its risks—compounding effects, regulatory ambiguity, and high volatility—demand caution. Investors must weigh its potential for outsized returns against the likelihood of erosion over time. For those with a short-term horizon and tolerance for aggressive swings, XRPT could serve as a tactical tool, but it is ill-suited for long-term, buy-and-hold strategies.

Source:
[1] XRPT | 2x XRP ETF, [https://www.volatilityshares.com/xrpt]
[2] XRPT Dividend Announcement $0.0128/Share 8/26/2025, [https://www.dividendinvestor.com/dividend-news/20250826/xrp-2x-etf-volatility-shares-trust-nasdaq-xrpt-declared-a-dividend-of-$0.0128-per-share/]
[3] 2x XRP ETF (XRPT), [https://www.aaii.com/etf/ticker/XRPT]
[4] XRP 2X ETF/Volatility Shares Trust (NASDAQ:XRPT), [https://www.dividendinvestor.com/dividend-history-detail/xrpt/]
[5] 2x XRP ETF (XRPT) Risk - Yahoo Finance, [https://finance.yahoo.com/quote/XRPT/risk/]