Key Summary:
The SEC's decision on the spot XRP ETF could trigger a significant market rally.
The current $2.2 billion XRP futures position suggests growing demand from institutional investors.
XRP (two highly bullish events anticipated by supporters occurred in 2025, yet XRP continues to lag behind the overall cryptocurrency market. On March 6, XRP was listed as a candidate for the U.S. "Digital Asset Reserve," and Ripple Labs reached a long-standing settlement with the U.S. Securities and Exchange Commission (SEC) on May 8.
XRP/USD (blue) compared to the total market capitalization of the cryptocurrency market. Source: TradingView / Cointelegraph
As of May 22, XRP fell 6% over the past three months, while the total market capitalization of the cryptocurrency market rose 10% during the same period. Traders remain confident that XRP could achieve a 45% increase to $3.50, and derivatives indicators also show that market confidence is strengthening.
The total open interest in XRP futures on major exchanges surged to 923 million XRP on May 22, a 31% increase from two weeks prior. The $2.2 billion position in the futures market indicates a significant increase in trader interest, but this is not necessarily bullish, as these instruments can also be used to short XRP prices.
Open interest in XRP futures on major exchanges, XRP. Source: CoinGlass
Some market analysts believe that the growing demand for leveraged XRP positions indicates increasing institutional interest, especially in the context of several issuers applying for the listing of a U.S. spot XRP exchange-traded fund (ETF). However, the U.S. SEC's final decision is expected to be revealed in October.
The excessive demand for bullish leveraged XRP has led to a positive funding rate, meaning that longs (buyers) need to pay holding costs. Given that cryptocurrency traders generally maintain an optimistic outlook, the annualized funding rate in a neutral market typically ranges from 7% to 14%, while during periods of market panic buying, this metric can exceed 50%.
Annualized funding rate for XRP futures. Source: Laevitas.ch
The annualized funding rate climbed to 19% on May 22, nearing a six-month high. However, the current level of optimism is far below the 100% annualized funding rate recorded on December 4, 2024, when XRP surged from $1.33 to $2.90 within seven days. The current level is not a bearish signal; rather, it leaves ample room for bullish positioning in the XRP futures market.
One reason for the limited rise in XRP prices can be attributed to U.S. Senator Cynthia Lummis, chair of the Senate Banking Committee's Digital Assets Subcommittee, repeatedly refusing to meet with representatives from Ripple. Ripple CEO Brad Garlinghouse called on this legislator on May 19 to "reconsider and become a leader for all cryptocurrencies" and to discuss "how to make the U.S. the world's cryptocurrency capital."
In fact, no factors can prevent XRP from reaching $3.50 or even higher, as Ripple Labs no longer faces direct threats from regulators, creating favorable conditions for establishing partnerships and implementing acquisition strategies. Historically, XRP tends to respond positively after such announcements, and the current $2.2 billion in futures open interest may help push XRP prices beyond the current historical high of $3.25.
Related: Solana (SOL) price fractal target breaks to $260, but analysts say one condition must be met first.
This article is for general reference only and should not be considered legal or investment advice. The views, thoughts, and opinions expressed in the article are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Original article: “XRP Price Fails to Respond to Two Extremely Bullish Developments — Here is Why”
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