After surging more than sixfold between early November and late January, prices of XRP (XRP), a cryptocurrency often referred to as Ripple, after its developer, has started to experience more sideways price performance.
Pulling back sharply in late January and early February, XRP prices are trending higher again as of this writing. However, taking into account changes in open interest, further volatility may be underway for the token, popular with retail investors but a cryptocurrency that has not seen much in the way of definitive institutional adoption.
To further assess the situation, let’s take a look at the latest open interest numbers for XRP, along with other recent news developments, and see whether XRP’s 2024-2025 bull run has more runway, or if a more bearish scenario is on the verge of playing out.
XRP and Open Interest
According to Binance, after reaching prices north of $3.30 per token back in mid-January, XRP slid slightly lower, but held steady through the end of the month. However, the XRP sell-off quickly accelerated with the token trying to hold $2.25 per token but has fallen off again with price currently at $2.20 on February 27th. This current sustained pullback could be aligning with the aforementioned open interest in XRP futures.
How so? A measure of the number of futures contracts outstanding for a particular crypto, open interest serves as a forward-looking gauge of investor demand, particularly among “whales,” or large cryptocurrency investors. Since XRP reached a new near-term highs a month ago, open interest in XRP futures contracts have fallen by 37%.
Yes, those more bullish on XRP’s future prospects may point to other recent developments to argue that a bull case can still be made for this altcoin. Even so, a closer look calls this into question.
Questionable Institutional Adoption Trends
At the same time that the XRP rally has come to an end, rumors upon rumors about institutional adoption of the Ripple network and its native token have come out of the woodwork.
For example, rumors of Ripple CEO Brad Garlinghouse getting appointed to the Trump administration’s recently-formed cryptocurrency council. In addition, there have also been rumors about banks and other financial institutions being on the verge of starting to use Ripple’s network in lieu of traditional methods of overseas remittance.
Some have even tried to tie in the possibility that the more pro-crypto Trump administration will ensure that Ripple prevails in its ongoing litigation with securities regulators. However, even with this supposed “catalyst,” it’s unclear how, in the event Ripple’s litigation issues dissipate, this factor will result in increased usage and higher prices for XRP.
In short, with the long-term bull case on shaky ground, at the same time that near-term altcoin traders and other speculators are now shying away from XRP positions, the current rebound could prove to be little more than a short-lived “dead cat bounce.”
Bottom Line
Only time will tell whether the recent drop in XRP futures open interest is a foreshadowing of further price declines. Although many are skeptical about XRP’s supposed “catalysts,” given XRP’s popularity among retail traders, all bets are off.
It’s always possible that retail traders overreact to even the smallest amount of evidence about progress with institutional adoption of XRP. Positive developments related to Ripple’s ongoing litigation could also drive a bullish overreaction by speculators.
With all of this in mind, one should consider the aforementioned futures open interest news as simply one factor that could determine where XRP prices are headed from here.
Alongside this news, as well as the other speculation about XRP, factors more directly related to the crypto market at large, such as the prospect of a favorable regulatory environment, as well as changes in monetary policy perceived to be positive for alternative assets like crypto, could also have an impact on XRP’s performance, as 2025 plays out.
