XRP Price Down For The Month – So Why Are Whales Opening Bullish Positions?
The XRP token has seen a 20% drop in 2024 and is currently approaching its lowest date since October 18, 2023. Despite the challenging price performance, popular traders in OKX are changing long-term (buy) leverage positions.
Interestingly, funding costs for XRP futures have remained flat for the past month, raising questions as to whether retail traders are mainly betting on the decline.
Has the negative news about Ripple and its founder affected the price of XRP?
Some of XRP's negative price performance may be due to negative news surrounding Ripple, the company behind the token launch and development of the Ripple Ledger database. In the year
The ongoing dispute with the SEC began in December 2020 when the regulator alleged that Ripple and its executives offered unregistered securities. However, in July 2023, a judge granted summary judgment in favor of Ripple, ruling that XRP was only a security when sold to institutional investors. Despite this, the final decision indicates that the SEC has built a case to justify their complaint and waive potential liabilities for Ripple.
Investors' distrust in Ripple was exacerbated by the January 31 hacking of the personal accounts of the company's founder and CEO, Chris Larson. Analysts highlighted a total of 213 million XRP transactions at the time, worth an estimated $112.5 million. While the issue only affects Larson's property, questions are raised about whether the company followed strong security measures.
Interestingly, Ripple's validators approved a “clawback” function in less than a week, allowing issuers on the XRP Ledger to seize back tokens. According to David Schwartz, Chief Technology Officer of Ripple, the functionality can be used to resolve legal disputes and comply with court orders. Schwartz explains that the new functionality differs from the current “freeze” feature in the network.
Expectations for the XRP ETF are falling and speculators are taking positions using derivatives
Another source of dissatisfaction among XRP investors is the realization that the chances of getting SEC approval for an XRP spot exchange-traded fund (ETF) are “very slim,” according to Scott Johnson, general partner at Van Buren Capital. Senior Bloomberg ETF analyst James Seifert shared a similar view in a Jan. 11 interview with Thinking Crypto's Tony Edwards.
Given the recent events surrounding the eXRP token and Ripple, investors can expect bearish sentiments from major traders. However, the trend has been the opposite of the long-to-short ratio.
Top traders on the OKX exchange currently offer longs at a 7.2x ratio, nearing a 30-day high – a significant change from the 1.6x indicator on February 1. Binance exchange data is less skewed, supporting longs at a healthy 2x, up from 1.8x on February 1. Basically, XRP whales and market makers increased their pay positions even as the price dropped to $0.50.
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Funding volume of perpetual contracts should be monitored to assess whether retail traders are taking the opposite side of the trade and betting on XRP price. Also known as reverse swaps, these derivatives instruments include an embedded rate that is calculated every eight hours. Basically, negative momentum indicates a desire to take short positions.
The data shows that XRP's funding volume has been close to zero since January 4th, indicating balanced demand between longs and shorts. Therefore, even though professional traders tend to be bullish, their positions receive the same amount of counterparty in terms of demand.
Finally, the data shows that XRP's wells and market makers are blindly bullish longs as the price continues to decline. On the positive side, there is no sign that these players are going to be fired, as the funding is incredibly balanced.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
