XRP's Bullish Momentum Strongest Since January 2018 as Futures Open Interest Hits Record High

Payments-focussed cryptocurrency XRP, which failed to set new price highs during the 2020-21 bull run due to regulatory struggles, is chalking out its fastest ascent in years, with derivatives tied to the token seeing record activity.

The cryptocurrency's price has surged 50% to seven-year highs above $3 this month, extending the past quarter's 240% rally, according to data source CoinDesk. Prices have gained 30% in the past seven days alone, lifting the market capitalization to $176.75 billion, the third-highest ahead of stablecoin tether.

XRP is witnessing the fastest observed rally since the altcoin boom of January 2018, according to a popular market analysis tool called the relative strength index (RSI). The measure oscillates between 0 and 100, measuring the speed and change of price movement over specific periods, typically 14 days or 12 months.

XRP's 12-month RSI has risen to 92, the highest level since October 2017, indicating that the momentum observed over the past 12 months is the strongest over seven years.

Rookie traders would quickly point out that RSI readings above 70 indicate overbought conditions and potential for a bull breather or correction. However, that's not necessarily the case, as RSI merely measures the speed of price changes over a specific period.

Indicators can continue to flash the so-called overbought reading longer than bears can stay solvent. As the law of motion states: an object in motion will remain in motion unless acted upon by an outside force.

"Crypto continues its recovery from Monday’s drop, with BTC pushing towards the $100k mark. The broader market is rebounding, with altcoins like XRP and XLM standing out. XRP has reclaimed the 3rd spot among cryptocurrencies and surpassed BlackRock’s market cap," Diego Cardenas, OTC trader at digital asset platform Abra, said in a note to CoinDesk.

"This surge is driven by a growing number of partnerships, the launch of Ripple’s stablecoin RLUSD, and speculation about a potential spot XRP ETF," Cardenas added.

Currently, XRP-specific factors combined with broader crypto market dynamics support the ongoing bullish momentum.

Take trading volumes for example. The spot market tally has tripled to over $23 billion in the past 24 hours, validating the price surge. Meanwhile, volumes in derivatives have more than doubled to $34 billion, according to data source Coingecko and Coinglass.

XRP's perpetual futures open interest has surged to a record high of 2.34 billion XRP, with funding rates representing the cost of holding leveraged bets hovering around 13%. That's well below the overheated 100% in early December, which signaled excess bullish leverage. In other words, the XRP market is much healthier and supports continued price gains.

Meanwhile, crypto market leader bitcoin has risen past $100,000, cheering the slowdown in the U.S. core inflation. The strength in bitcoin often translates to increased risk-taking in the broader crypto market.

13:34 UTC: Correction: The chart shows 12-month RSI and not 14-month as the previous version erroneously mentioned.