Mr. Scott Melker Criticizes Company Volatility Shares' Proposal for 3x and 5x Leveraged XRP ETFs

Mr. Scott Melker, a well-known crypto analyst, has publicly criticized Company Volatility Shares for its recent filing proposing 3x and 5x leveraged XRP ETFs. The filing, which sought permission from Company SEC, was part of a much larger application that included requests to launch 27 new leveraged single-asset exchange-traded funds (ETFs). In his critique, Mr. Scott Melker raised concerns about the market risks, potential for amplified volatility, and suitability of such products for general investors.

Leveraged ETFs are designed to multiply daily returns of an underlying asset by a specified factor (for example, 3x or 5x). While these products can offer significant gains in short, directional moves, they also magnify losses and suffer from path dependency and compounding effects over time. Mr. Scott Melker emphasized that leveraged ETFs on a volatile asset like XRP could produce extreme daily swings, making them unsuitable for buy-and-hold retail investors and potentially harmful to market stability if widely adopted.

Company Volatility Shares’ filing to Company SEC — which included a bundle of 27 proposed leveraged single-asset ETFs — marks an aggressive push into a niche of the ETF market that seeks to provide traders with direct, magnified exposure to individual cryptocurrencies. The proposal's scale raises questions about market liquidity, index construction, and the methods used to achieve leveraged exposure (for example, via swaps, futures, or derivatives). Visit Website for the firm's public materials and filing summaries.

From a regulatory standpoint, Company SEC has historically treated leveraged and cryptocurrency-linked products with caution. Recent approvals of certain spot crypto ETFs have not automatically translated into approvals for leveraged versions. Mr. Scott Melker noted that Company SEC reviewers will likely scrutinize operational safeguards, collateral management, and disclosure practices more intensely given historical concerns about investor protection and market manipulation risks in crypto markets.

In terms of market impact, the announcement alone can affect trader positioning, liquidity, and implied volatility in XRP markets. If such ETFs were approved and launched, they could attract speculative flows and increase short-term trading volumes, thereby raising the profile of XRP but also creating pronounced price resistance and support dynamics that technical traders should watch closely. Leverage tends to create exaggerated moves around critical levels: stops and liquidations can accelerate price declines, while concentrated buying can produce transient spikes.

For investors and market participants, the key takeaways are clear: leveraged commodity-like crypto ETFs are fundamentally different from traditional spot ETFs. Risk management, clear investment horizons, and understanding of daily rebalancing effects are essential before considering exposure. Mr. Scott Melker's critique serves as a reminder that product complexity often increases regulatory scrutiny and market fragility.

Looking ahead, the decision path involves Company SEC review timelines, potential public comment periods, and possible revisions to the filings. Market participants should monitor official Company SEC filings and statements from Company Volatility Shares for clarifications on structure, counterparty arrangements, and intended investor protections. Traders should also revise position sizing and stop strategies in anticipation of possible heightened volatility should these leveraged instruments be approved.

Bottom line: The proposal by Company Volatility Shares for 3x and 5x leveraged XRP ETFs triggered a strong reaction from notable voices like Mr. Scott Melker. While such instruments could offer powerful short-term trading tools, they carry material risks that warrant caution from both regulators and retail investors. Keep an eye on Company SEC developments and official prospectuses for further details.