Data shows that XRP is currently exhibiting an interesting behavior in the chain amid broader market uncertainty. This unusual behavior was highlighted by CryptoQuant, a crypto-on-chain analytics company. The unusual behavior is notable because it is comparatively associated with a growing open interest in XRP to other cryptocurrenciesThis suggests that XRP is poised for a major price move.
XRP Open Interest Rises
According to CryptoQuant data initially noticed by an analyst connected to the analysis platform, recent news regarding the SEC and Ripple, XRP’s parent company, have seen open interest in XRP resume an upward trend.
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According to the CryptoQuant chart below, open interest, which has been generally in an uptrend since April 15, recently took a hit in the first week of June and started falling in tandem with a decline in the price of XRP. However, open interest has now recovered and resumed its upward trend.
Interestingly, this increase is more significant than other cryptocurrencies, as many crypto prices have struggled over the past week. The rising open interest also reflects the current sentiment among XRP investors, as it indicates that investors are opening more positions in anticipation of a rise in the price of XRP.
How does this affect the price?
Open interest refers to the total number of outstanding derivative contracts that have not yet been settled. Climbing open interest often means more money flowing into the market. This can be clearly seen in the chart above, as increases in open interest have usually registered with a corresponding increase in the price of XRP.
Furthermore, open interest is considered a leading indicator for many savvy investors. When it rises, it indicates that new money is flowing into the market as traders open new positions. This increased activity and liquidity can foreshadow the price of an asset. Regardless of which direction the price moves, one outcome is virtually guaranteed: more volatility.
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At the time of writing, XRP is trading at $0.486 and has risen 1.44% over the past seven days. Despite this meager increase, it is interesting to note that XRP is currently the only asset in the top 20 largest cryptocurrencies that was still in the green zone last week. Add to the bullish outlook is the strong trading volume in recent days.
According to data from Santiment, some traders are still bearish on XRP, despite the fact that it is currently outperforming many other assets. XRP is also a trader who is shorting to counter the bulls. However, if Santiment notedThis is a good sign for patient bulls, as the shorting activity can act as ‘rocket fuel’ continued price increases when they are eventually liquidated.
Featured image created with Dall.E, chart from Tradingview.com