The surge in XRP options activity is undoubtedly a bullish signal for the cryptocurrency.
The XRP options market on Deribit is experiencing a surge in activity, particularly for call options betting on a price surge for the cryptocurrency. This development has some observers speculating about a potential link to the long-awaited arrival of a US-based XRP ETF.
As of August 12, 2024, the $1.10 call option for XRP, expiring on August 28, boasts the highest open interest on the exchange, with 4,347,000 contracts valued at a staggering $2.44 million according to data from Amberdata. This is a significant figure considering the XRP options market is only five months old.
Open Interest Soars but Can the Price Break Resistance?
The open interest, representing the number of active bets, has skyrocketed by 838,000 contracts in those five months. Analysts like Griffin Ardern, head of options trading and research at BloFin, believe this activity reflects a “net long position” strategy.
“From the gamma distribution, it feels like a net long position expiring on Aug. 30,” said Ardern. “If the resistance level of $0.75 from the past two weeks can be broken, the price of XRP is likely to rise above $1.10.”
Ardern further added, “Perhaps institutions will likely apply for an XRP ETF in the US, which may be an important factor driving a sharp rise in prices.” This aligns with the recent surge in XRP following the SEC’s court ruling on Ripple Labs’ unregistered XRP sales case.
While the SEC did secure a $125 million penalty, their request for a $2 billion fine was rejected. Ripple considers this a victory, reigniting hopes for a potential XRP ETF launch in the US, similar to the Bitcoin and Ether ETFs approved earlier this year.
XRP $1.10 Price Target Debate
However, not everyone is convinced that the price will reach $1.10 by August 28. Martin Cheung, an options trader at Pulsar Trading Capital, expressed skepticism. “XRP has already rallied significantly this year, and there’s a strong belief that the next ETFs will be for XRP and Solana,” he stated, commenting on the high demand for $1.10 call options.
“That said, the August end is too close; a potential XRP ETF announcement might drive prices higher by, say, 20%, but $1.10 looks too far”, Cheung continued.
The surge in XRP options activity is undoubtedly a bullish signal for the cryptocurrency. While the short-term price target of $1.10 might be ambitious, the underlying sentiment points towards optimism surrounding a potential US XRP ETF launch.
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