Open Interest Surge Hints at XRP Price Explosion

As open interest increases alongside price, investors are opening more positions with the expectation that XRP price will increase. According to Crypto Quant, recent news involving the SEC could have fueled open interest in XRP, indicating that more trading activity is occurring.

Hopes for a settlement are fading

On June 18, the XRP price declined by 2.65% of its value, reversing gains from June 17 and closing the session at 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.

The SEC filed a response to Ripple’s Notice of Supplemental Authority on Friday last week. The regulator’s calculation, based on the Terraform Labs settlement, was far below the almost $2 billion proposed in its opening brief.

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 have a strong belief in the current market trend. For example, 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, either 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 (whether bullish or bearish) is likely to continue as more participants enter the market. XRP price could be in a bullish trend because its price has increased over the past week.

Increased open interest generally means higher liquidity. This is beneficial for traders as it can lead 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 is surging and prices are rising, this suggests a strong bullish sentiment. Rising open interest and rising prices indicate a strong bearish sentiment.

If prices are rising but open interest is decreasing, it might suggest a weakening trend as traders are closing out their positions. Falling prices and open interest may indicate a potential reversal or weakening of the downward trend.