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 battles, is on pace for its fastest rise in years, with derivatives linked to the token seeing record activity.

The cryptocurrency’s price has surged 50% to seven-year highs above $3 this month, extending the past quarter’s 240% rally, according to data source CoinDesk. Prices have risen 30% in the past seven days alone, lifting the market capitalization to $176.75 billion, the third highest ahead of 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 metric ranges between 0 and 100 and measures the speed and change of price movements over specific periods, typically 14 days or 12 months.

XRP’s 14-month RSI has risen to 92, the highest level since October 2017, indicating that the momentum observed over the past 12 months is the strongest in seven years.

Rookie traders will be quick to point out that RSI readings above 70 indicate overbought conditions and the potential for a bull bust or correction. However, this is not necessarily the case, as the RSI simply measures the rate of price change over a certain period of time.

Indicators can continue to flash the so-called overbought reading 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 continues its recovery from Monday’s decline, with BTC pushing towards the $100,000 mark. The broader market is on the rise, with altcoins like XRP and XLM standing out. XRP has regained 3rd place among cryptocurrencies, surpassing BlackRock’s market cap,” Diego Cardenas, OTC trader at digital asset platform Abra, said in a note to CoinDesk.

“This increase is driven by a growing 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 the ongoing bullish momentum.

Take trading volume for example. The spot market has tripled to over $23 billion over the past 24 hours, confirming the price rally. Meanwhile, volumes of derivatives more than doubled to $34 billion, according to the data source Coing gecko and Coinglass.

XRP’s perpetual futures open interest has risen to an all-time high of 2.34 billion XRP, with funding rates representing the cost of holding leveraged bets at around 13%. That’s well below the overheated 100% in early December that signaled excessive bullish leverage. In other words, the XRP market is much healthier and supports continued price increases.

Meanwhile, crypto market leader bitcoin has surged above $100,000, cheering the slowdown in US core inflation. The strength of bitcoin often translates into increased risk taking in the broader crypto market.