XRP’s Bull Momentum Strongest Since January 2018 as Futures Open Interest Hits Record High
Payments-focused cryptocurrency XRP, which failed to set new price highs during the 2020-21 bull run due to regulatory difficulties, is unleashing its fastest climb in years, with derivatives bound to the token that sees the activity of the record.
The cryptocurrency’s price surged 50% to a seven-year high above $3 this month, extending last quarter’s 240% rally, according to the data source CoinDesk. Prices have gained 30% in the past seven days alone, lifting the market capitalization to $176.75 billion, the third highest ahead of the stablecoin tether.
XRP is witnessing the fastest observed rally since the altcoin boom in January 2018, according to a popular market analysis tool called the relative strength index (RSI). The measure oscillates between 0 and 100, measuring the speed and change of price movement over specific periods, usually 14 days or 12 months.
XRP’s 14-month RSI rose to 92, the highest level since October 2017, indicating that the momentum observed over the past 12 months is the strongest in seven years.
Novice traders will quickly point out that RSI readings above 70 indicate overbought conditions and the potential for a bull breather or correction. However, this is not the case, as the RSI only measures the speed of price changes over a given period.
Indicators can continue to flash so-called overbought readings longer than bears can remain solvent. As the law of motion states: an object in motion will remain in motion unless acted upon by an external force.
“Crypto continued its recovery from Monday’s lows, with BTC pushing towards the $100k mark. The broader market rebounded, with altcoins like XRP and XLM standing out. Recovered by XRP ranks 3rd among cryptocurrencies and surpasses BlackRock’s market cap,” Diego Cardenas, OTC trader at digital asset platform Abra, said in a note to CoinDesk.
“This surge is driven by an increasing number of partnerships, the launch of Ripple’s stablecoin RLUSD, and speculation about a potential spot XRP ETF,” Cardenas added.
Currently, XRP-specific factors combined with broader crypto market dynamics support continued bullish momentum.
Take trading volume for example. The spot market tally has tripled to over $23 billion in the past 24 hours, confirming the bullishness. Meanwhile, volumes in derivatives more than doubled to $34 billion, according to the data source Coingecko and coinglass.
XRP’s perpetual futures open interest climbed to a record high of 2.34 billion XRP, with funding rates representing the cost of holding leveraged bets hovering around 13%. That’s down from a blistering 100% in early December, which signaled excessive bullish leverage. In other words, the XRP market is healthier and supports the continued price increase.
Meanwhile, crypto market leader bitcoin rose above $100,000, fueling a slowdown in US core inflation. Strength in bitcoin often translates into higher risk taking in the broader crypto market.
