XRP, utilized by Ripple for cross-border transactions, wrapped up May exhibiting signs of uncertainty. Yet, activity on the leading crypto options exchange, Deribit, indicates that bulls are still in the game.
The payments-centric cryptocurrency formed a “doji” with an extended upper shadow in May, a classic marker of market indecision, according to the charting platform TradingView.
The long upper wick implies that bulls drove prices up to $2.65, but bears intervened, pushing prices back down to levels near the beginning of the month.
The appearance of the doji indicates that the recovery rally from early April lows around $1.60 has likely lost momentum. Doji candles following uptrends often lead technical analysts to speculate bull fatigue and a potential downturn.
Recently, some traders bought the $2.40 strike put option expiring on May 30, providing protection against price declines.
Bullish options open interest
The overall sentiment remains optimistic, as options open interest is focused on higher-strike calls indicating a sustained bullish outlook. Open interest refers to the number of active contracts at any given time. A call option offers the buyer an asymmetrical upside exposure to the underlying asset, in this case, XRP, representing a bullish stance.
“XRP open interest on Deribit is continuously rising, with the highest concentration of strikes clustered between $2.60 and $3.00+, indicating a distinctly bullish sentiment while the spot price is currently at $2.16,” remarked Luuk Strijers, CEO of Deribit.
The chart reveals that the $4 call option is the most popular, with a notional open interest of $5.39 million. Calls at the $3 and $3.10 strikes have over $5 million in open interest each. Notional open interest refers to the dollar value of the active contracts.
“XRP option open interest is divided across June and September expirations, with monthly notional volumes estimated at $65–$70 million, of which more than 95% is traded on Deribit,” Strijers noted.
The bullish sentiment may be attributed to XRP’s role as a cross-border payment solution and increasing expectations for a spot XRP ETF listing in the U.S. Moreover, the cryptocurrency is achieving traction as a corporate treasury asset.
Ripple, which leverages XRP for cross-border transactions, recently pointed out its potential to rectify inefficiencies in SWIFT-based cross-border payments. The B2B cross-border payments market is projected to grow to $50 trillion by 2031, a 58% increase from $31.6 trillion in 2024.
Leave a Reply