XRP, the sixth-largest cryptocurrency by market cap, has surged to its highest price in three years, trading at $1.06, marking an impressive 80% gain over the past week, Decrypt reports.
This rise comes despite a 16% pullback from its Saturday peak of $1.20, as broader cryptocurrency markets benefit from shifting political winds in the US and growing investor optimism.
The surge in XRP’s price coincides with a record-breaking spike in XRP futures open interest, which now stands just below $2 billion, according to CoinGlass data. This surge in open interest — the total number of futures contracts that remain open and unsettled — is typically a sign of increased speculative activity in the market. High open interest often indicates a growing market sentiment, with traders betting on future price movements, leading to greater volatility as leveraged positions amplify market reactions.
Nick Forster, the founder of onchain options DeFi protocol Derive, explained that the record open interest is a clear indication of bullish sentiment surrounding XRP.
“The recent spike in XRP futures open interest signifies a rise in trader interest, often an indicator of market optimism,” Forster told Decrypt.
He added that high and consistent funding rates suggest that new market participants are entering the space, taking advantage of opportunities to capitalize on the growing gap between spot prices and futures prices in XRP.
Traders are also increasingly engaging in “basis trading,” a strategy that profits from the difference between an asset’s spot price and its futures price. This strategy has been driving speculative optimism as traders position themselves for anticipated price movements.
The recent surge in XRP’s price and futures activity is also tied to political developments in the US In particular, traders are hopeful that the shift in political leadership following the US presidential election will result in more favorable conditions for XRP and the broader crypto market. Speculation is mounting that US Securities and Exchange Commission (SEC) Chair Gary Gensler may step down after President-elect Donald Trump’s inauguration in January.
The SEC has long been a thorn in the side of Ripple Labs, the company behind XRP, with an ongoing lawsuit dating back to December 2020. The SEC alleges that Ripple and its founders sold XRP as an unregistered security. While a federal judge ruled in July 2023 that XRP is not a security when sold to retail investors, the SEC has appealed the decision, and the case remains unresolved. Many in the crypto industry have criticized Gensler’s stance on digital assets, with some speculating that his departure could ease regulatory tensions and help XRP regain market confidence.
With the potential shift in leadership, some investors are optimistic that the SEC’s approach to XRP might soften, allowing Ripple to expand its use case and clear the regulatory cloud hanging over its head.
“XRP is rising due to rumors that Ripple CEO Brad Garlinghouse will be advising Trump on crypto policy,” said Pratik Kala, portfolio manager at Apollo Crypto.
This speculation has buoyed sentiment, with traders hoping that a more favorable regulatory environment could result in a US-listed XRP exchange-traded fund (ETF), a development that could significantly boost XRP’s market presence.
Ripple CEO Brad Garlinghouse has expressed confidence that the SEC will eventually approve an XRP ETF, which would allow investors to gain exposure to XRP without holding the cryptocurrency directly. Bitwise, a fund manager, recently filed for an XRP ETF, further fueling speculation that an approval could be on the horizon if the regulatory landscape becomes more favorable.
The ongoing legal battle between Ripple and the SEC has raised uncertainty over XRP’s classification as a security. However, with Trump’s potential to reshape the regulatory environment, XRP traders are positioning themselves for potential upside, driven by hopes of a more crypto-friendly stance from the US government.
