XRP Options Soar on ETF Hopes: Traders Lock in $2M on $1.10 Call—What’s Driving the Surge?
TL;DR
XRP options activity surges: The $1.10 call option for XRP, expiring on August 28, leads with 4,347,000 contracts valued at $2.44 million, reflecting high market interest.
Potential ETF influence: Analysts speculate that the surge in options activity may be linked to hopes for a US-based XRP ETF, especially after Ripple’s partial court victory against the SEC.
Price target debate: While some believe XRP could surpass $1.10 if resistance levels are broken, others are skeptical about reaching this target by the end of August.
The increase in XRP options trading is a positive indicator for the cryptocurrency. On Deribit, the XRP options market is seeing heightened activity, especially with call options that anticipate a price increase. This trend has led some analysts to wonder if it might be connected to the much-anticipated launch of a US-based XRP ETF.
As of August 12, 2024, the $1.10 call option for XRP, set to expire on August 28, leads the exchange with the highest open interest, totaling 4,347,000 contracts worth an impressive $2.44 million, as reported by Amberdata. This notable amount is particularly striking given that the XRP options market has only been active for five months.
Open Interest Soars but Can the Price Break Resistance?
Over the past five months, open interest, which indicates the volume of active contracts, has surged by an impressive 838,000 contracts. Analysts, including Griffin Ardern, who leads options trading and research at BloFin, suggest that this surge points to a strategy focused on maintaining a “net long position.”
“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 corresponds with the recent spike in XRP after the SEC’s court decision regarding Ripple Labs’ unregistered sales of XRP. The SEC managed to impose a $125 million penalty, but their demand for a hefty $2 billion fine was turned down.
Ripple views this outcome as a win, sparking renewed optimism for the possibility of an XRP ETF debut in the US, akin to the Bitcoin and Ethereum ETFs that received approval earlier this year.
XRP $1.10 Price Target Debate
Despite some optimism, there are skeptics about the price hitting $1.10 by August 28. Martin Cheung, an options trader at Pulsar Trading Capital, voiced his doubts.
“XRP has already rallied significantly this year, and there’s a strong belief that the next ETFs will be for XRP and Solana,” he remarked, commenting on the high need for $1.10 call options. Cheung further stated, “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.”
The increase in XRP options trading is a positive indicator for the cryptocurrency market. 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.
Filed under: News - @ August 12, 2024 2:17 pm