Open Interest Surge Hints at XRP Price Explosion

As open interest rises with the price, investors are taking more positions in anticipation of an increase in XRP price. According to Crypto Quant, recent news from the SEC may have contributed to the increase in open interest in XRP, suggesting greater trading activity.

Hopes for a settlement are fading

On June 18, the XRP price declined by 2.65%, reversing gains from June 17 and closing the session below $0.50. It’s now flat, trading for $0.49. The absence of news related to the SEC vs. Ripple case on Tuesday could have led investors to lose hope of a settlement after recent court filings.

Last week, the SEC responded to Ripple’s Notice of Supplemental Authority. Notably, the regulator’s calculation, based on the Terraform Labs settlement, was significantly lower than the nearly $2 billion initially proposed in its opening brief, highlighting the contentious nature of the case.

The response contested Ripple’s proposal to pay $10 million for breaching US securities laws. A post from Stuart Alderoty, Ripple’s Chief Legal Officer, was perceived as a proposal for a $102.6 million settlement.

Ripple has not responded to the SEC’s reply to its Notice. The company faces an injunction prohibiting XRP sales to US institutional investors and a $2 billion penalty.

What does rising and falling open interest mean for XRP price?

Increasing open interest in a financial market typically indicates a few key points: market confidence, increased trading, and high liquidity.

When open interest is rising, it often signifies that traders strongly believe in the current market trend. In a rising market, increasing open interest can indicate that more traders are confident the market will continue to rise.

More market participants are opening new positions by initiating new long (buy) or short (sell) contracts. This suggests heightened interest and participation in the market.

High open interest usually accompanies strong trends, either upward or downward. This means that the existing trend (bullish or bearish) will likely continue as more participants enter the market. XRP’s price could be in a bullish trend because it has increased over the past week.

Increased open interest generally means higher liquidity. This benefits traders by leading to tighter bid-ask spreads and less slippage during trades.

Traders can assess market sentiment by analyzing changes in open interest and price movements. If open interest surges and prices rise, this suggests a strong bullish sentiment. Increasing open interest and rising prices indicate a strong bearish sentiment.

If prices rise but open interest decreases, it might suggest a weakening trend as traders close out their positions. Falling prices and open interest may indicate a potential reversal or weakening of the downward trend.