Why XRP is the Cryptocurrency Equivalent of a Flat Tire 🚗💨

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Key takeaways:

  • The SEC’s decision on a spot XRP ETF could ignite a significant rally. Or not. 🤷‍♂️

  • The current $2.2 billion in XRP futures hints at growing institutional investor demand. Or maybe just wishful thinking. 🙄

In a plot twist that even the most optimistic XRP (XRP) advocates couldn’t have scripted, 2025 has delivered two of the most bullish events imaginable. Yet, here we are, watching XRP underperform like a contestant on a reality show who forgot their lines. On March 6, XRP was listed as a candidate for the United States’ “Digital Asset Reserve,” and Ripple Labs finally settled a multi-year-long complaint with the US Securities and Exchange Commission on May 8. Cue the confetti! 🎉

Despite these monumental events, XRP managed to fall 6% in the three months leading up to May 22, while the overall crypto market capitalization rose 10%. It’s like watching your friend win the lottery while you’re stuck with a coupon for a free sandwich. Traders are still holding out hope for a 45% rally to $3.50, with derivatives metrics signaling rising confidence. Or maybe just rising delusion. 🤔

Leverage use ramps up ahead of potential spot XRP ETF listing

The aggregate open interest on XRP futures on major exchanges jumped to 923 million XRP on May 22, up 31% from two weeks prior. The $2.2 billion position in futures markets signals growing interest from traders, but let’s be real: it’s not necessarily bullish. Those instruments can also be used to speculate on the XRP price downside. It’s like betting on a horse that’s already limping. 🐴💔

Some traders argue that the increased demand for leveraged XRP positions indicates growing institutional interest, especially as multiple issuers filed for a spot XRP exchange-traded fund (ETF) listing in the US. However, the final decision by the US SEC should be made in October. So, stay tuned for that nail-biter! 📅

Excessive demand for bullish leveraged XRP causes a positive funding rate, meaning longs (buyers) are the ones paying the carry cost. As cryptocurrency traders are generally optimistic, a 7% to 14% annualized funding rate is expected in neutral markets, while periods of FOMO can push the indicator above 50%. It’s like a party where everyone’s invited, but only the optimists show up. 🎈

The annualized funding rate jumped to 19% on May 22, nearing the highest levels in six months. Still, the current optimism level is nowhere near the 100% annualized funding rate from Dec. 4, 2024, which followed an impressive 7-day rally to $2.90 from $1.33. Far from being bearish, the current level leaves room for bullish positioning on XRP futures markets. It’s like saying there’s still hope for a sequel to a bad movie. 🎬

Favorable regulation opens the door for new partnerships and acquisitions

Part of the limited XRP price upside can be explained by the multiple rejections of US Senator Cynthia Lummis, Chair of the US Congress Digital Assets Subcommittee, to meet Ripple representatives. Ripple CEO Brad Garlinghouse asked on May 19 that the lawmaker “reconsider and be a leader for ALL of crypto,” and discuss “how to make the US the crypto capital of the world.” Because who wouldn’t want to be the capital of something that’s still figuring itself out? 🏛️

There is nothing stopping XRP from hitting $3.50 or even higher, as Ripple Labs is no longer facing direct threats from regulators, which paves the way for partnerships and acquisitions. Historically, XRP has reacted very positively following those announcements, and the $2.2 billion futures open interest could help catapult XRP price above the current $3.25 all-time high. Or it could just sit there, like a cat on a windowsill, watching the world go by. 🐱

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of CryptoMoon.

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2025-05-23 00:18