Investors are taking a renewed look at the futures market tied to the payments-oriented cryptocurrency XRP in hopes of Ripple Labs, the company that issued the token, winning its lawsuit against the US Securities and Exchange Commission and more Will stimulate risk appetite in the broader market.
XRP is up 57% since March 22 to hit a 10-month high of $0.584, according to CoinDesk data.
Since the start of the rally, notional open interest, or dollar value tied up in unsettled and active contracts traded on futures and perpetual futures exchanges, has risen nearly 90% to $843 million, the highest Value since December 2021, data from Coinglass shows.
A spike in open interest that accompanies a price surge typically indicates an influx of new money on the bullish side and is intended to confirm the uptrend. At press time, funding rates – which represent the cost of holding bullish long or bearish short positions – were positive on most exchanges, indicating the dominance of bullish leveraged traders. The broader market was also on the rise, with Bitcoin surging above $28,000, a move that reversed losses recorded earlier this week after the US Commodity Futures Trading Commission (CFTC) sued Binance.
“The bullish momentum stems from Ripple’s case against the SEC, where optimism for Ripple’s win appears to be becoming more dominant,” said Lewis Harland, portfolio manager at Decentral Park Capital, in a market update.
“Perhaps this Ripple gain will trigger a bullish impulse along the risk curve (alternative season),” Harland added. Alt Season is crypto slang that describes a period when alternative cryptocurrencies such as XRP, SOL, DOT, gaming tokens, DeFi coins and meme coins outperform Bitcoin and Ether.
Ripple and XRP are not interchangeable. While Ripple is a fintech company focused on building a global payments network, XRP is an independent digital asset used for things like online payments and currency exchange.
In late 2020, the SEC mandated the Ripple Network to sell unregistered securities after the platform sold $1.3 billion worth of XRP. Ripple has long maintained that XRP is a commodity and not a security as claimed by the SEC.
Securities are more tightly regulated than commodities and require more transparency and reporting from companies. Therefore, Ripple’s win should bring joy to the broader market, but a loss could reignite risk aversion.
“A win for the SEC could also impact other altcoins as they are likely to be more regulated,” said Markus Thielen, head of research and strategy at crypto services provider Matrixport, in a note to clients on Monday. “However, if Ripple is successful in this case, it will solidify XRP’s legality in the US market and help fuel a price rally.”