XRP, the token linked to Ripple Labs, has reached its highest price in 3 years, driven by a record increase in Open Interest (open futures contracts) and political expectations in the US.
Price growth and notable trading activity
1. XRP price surges:
• The price $XRP reached a peak of $1.20 on Saturday but is currently trading at $1.06, up over 80% for the week.
• The growth is driven by Donald Trump's victory in the presidential election, raising expectations for a crypto-friendly policy.
2. Open Interest reaches record high:
• The total open futures contract value of XRP has surged to nearly $2 billion, the highest ever, according to data from #CoinGlass .
• Open Interest reflects an increase in speculative trading, indicating optimistic sentiment from investors.
3. Derivative finance:
• Trading strategies such as basis trading are being used to exploit the price differences between the spot and derivatives markets of XRP.
• Nick Forster, founder of Derive, stated: 'This activity shows the appeal of XRP and the optimism from the trading community.'
Impact from politics and legality
1. SEC lawsuit and new expectations:
• Ripple has faced a lawsuit from the SEC since 2020 over XRP being classified as a security. Although part of the lawsuit was resolved in 2023, the SEC continues to appeal with a deadline in January 2025.
• Under the new administration of Donald Trump, investors expect a more crypto-friendly policy, including the potential to mitigate legal pressure from the SEC.
• Trump also announced his intention to 'fire' Gary Gensler, the SEC Chairman, on his first day in office, increasing optimism in the community.
2. ETF and Ripple's role:
• Rumors that Ripple's CEO, Brad Garlinghouse, will advise crypto policy for Trump have also provided a significant boost for XRP.
• With Bitwise's XRP ETF application pending approval, investors are hopeful for potential profit opportunities from this event.
Conclusion
XRP is being driven by legal and political factors, along with increased speculation from the derivatives market. However, prices and investor sentiment can change rapidly due to high volatility and potential legal risks. Investors need to be cautious before making decisions.
