Surge in Numbers: An Upward Trend in Statistics

Ripple’s price surged past $0.66 on March 25, representing a 17% increase within the week. Recent trends in the derivative market indicate that traders are eagerly anticipating further gains.

Over the past week, Ripple (XRP) has been following the upward trend of the overall cryptocurrency market.

On March 11, XRP experienced an unexpected breakout, with its price surging 18.5% within a 24-hour period to reach a peak of $0.74. However, a wave of profit-taking quickly led to a correction, bringing the price below $0.60 within a week.

After a period of consolidation, recent trends in the derivatives market suggest that bullish XRP traders are preparing for another significant price increase.

CoinGlass’s open interest chart provides real-time information on the total value of active futures contracts for a specific cryptocurrency. It serves as a measure of market depth, liquidity, and overall investor interest in the underlying asset.

On March 26, XRP’s open interest reached $1.02 billion, its highest level since March 14. This also indicates a net capital inflow of $150 million since the significant market dip on March 20.

An increase in open interest during a price recovery phase suggests that most traders believe the current upward trend will continue, leading to a rapid influx of capital.

Between March 20 and March 26, XRP spot prices increased by 19.4%, while open interest only grew by 15%. This unusual market alignment suggests that the current rally is driven more by organic spot demand than speculative trading in the futures market.

To capitalize on the rally, bullish traders in the derivatives market have increased their leverage by 100%. This indicates stronger fundamental factors supporting the ongoing rally, such as increased adoption and positive ecosystem developments on the Ripple-backed blockchain network, including the launch of automated market maker (AMM) functionality.

David Schwartz, Ripple’s Chief Technology Officer, praised the AMM functionality as a significant evolution of the platform’s decentralized exchange.

Taking advantage of this development, speculative traders in the derivatives market have shown a greater appetite for high-risk leveraged positions this week.

CoinGlass’s funding rate metric reflects the percentage of fees paid between long traders and short position holders in the derivatives market.

Between March 23 and March 26, XRP’s funding rate increased from 0.01% to 0.02%, indicating that bullish traders have more than doubled their leveraged positions in the past 72 hours.

Typically, an increase in funding rate indicates a willingness to take on more risk and suggests an expectation of further price increases. Long traders pay higher fees to short traders to maintain their perpetual future positions in anticipation of larger profits when spot prices rise.

When short traders observe a rapid increase in leverage and risk-taking among long traders, they often make spot purchases to hedge their bets and mitigate potential losses if the rally surpasses their margin-call price.

These hedging purchases by short traders could contribute to growing market demand and further accelerate the price rally in the coming days.

Considering the 100% surge in bullish traders’ leverage activity, the organic growth in spot demand, and the potential hedging strategies of short traders, XRP’s price appears poised for another increase above $0.75.

The relative strength index (RSI), currently at 53.2, supports this bullish price forecast for XRP. After a 17% gain in the past week, there is still significant room for growth before XRP markets become overbought.

Therefore, if XRP can break through the next significant resistance level at $0.70, as indicated by the upper Bollinger band, a major breakout towards $0.75 could be imminent.

However, in a bearish market downturn, it will be important to monitor the support level at $0.57, represented by the lower limit of the Bollinger band indicators. A significant drop below this range could signal a regain of control by the bears in the market momentum.

In response to the recent AMM bug discovery, a Ripple developer has proposed a Canary network for the XRP ledger.