Ripple Price Analysis: XRP declines ahead of XRP/USD quanto swaps launch on BitMEX

XRP tested the intraday low at $0.2475 and recovered to $0.2500 by the time of writing. The third largest digital asset has lost about 1.4% since the beginning of the day, moving in sync with the market. 

BitMEX confirms XRP/USD quanto swaps launch

As it has become known in the end of January, the cryptocurrency derivatives exchange BitMAX was about to launch nw derivative instruments for the third largest digital asset. To day the exchange confirmed that the swaps would be available as of February 5.

We at BitMEX are proud to announce that trading of a new perpetual swap on the XRP token (XRPUSD) will begin at 0400 UTC on 5 February 2020.

While the details are unavailable, the exchange said that the new contracts would be much alike the existing Bitcoin swaps. 

According to Investopedia definition, quanto swaps are a cash-settled, cross-currency interest rate swap, where one of the counterparties pays a foreign interest rate to the other. The notional amount is denominated in the domestic currency. Interest rates may be fixed or floating. In terms of cryptocurrency, it means that cryptocurrency traders will be able to buy and sell XRP against USD with leverage up to x100. 

What does it mean for XRP

The comments below the announcement illustrate the divergent opinion of the community about Ripple's token. Many critics believe that the launch of the instrument will trigger massive sell-off as traders will get a handy tool to make bearish bets. 

However, some market experts point out that the swaps are more likely to support the price. Thus, a Bitcoin trader Sean Nance noted that XRP was undervalued, which made case for a price pump.

With $XRP still being around it's lows, it honestly makes more sense for it to pump when Bitmex lists the perp contract than dump. Red squiggly is an idea I had posted a while back: could still be on track or even push higher after listing.

XRP/USD: technical picture

From the long-term point of view, XRP/USD is moving within an upside channel. The price bumped into an upper boundary of the channel and reversed to the downside with the initial support now seen at $0.2328 (SMA100 daily). If it is cleared, the sell-off may continue towards the lower boundary of the range at $0.2140, reinforced by SMA50 daily.

On the upside, we will need to see a strong move above SMA200 daily at $0.2565 and $0.2600 for the bullish momentum to gain traction. The next aim is seen as high as $0.3000.

XRP/USD daily chart