XRP price reclaims $0.60, eyes 15% rally even as Ripple trading volume hits four-year low in Q3
- XRP price is looking to rally toward $0.700 after successfully breaching a 10-week-long barrier.
- The mostly positive funding rate suggests that this is not the local top, as traders are holding a long position.
- The biggest driving force for Ripple is its partial win against SEC, given it registered a four-year low in terms of trading activity in Q3.
XRP price is making consistent growth, and by the looks of it, traders and investors are highly bullish regarding the future price action of the token. But while a price rise is a positive development if it is not backed by trading activity, it might not be too long before it corrects, which could be a threat to Ripple.
XRP price gains spectacularly
XRP price at the time of writing can be seen trading at $0.609 after breaching the multi-month resistance level of $0.600. Reclaiming this price point as a support level is crucial to the altcoin, which would be confirmed after a daily candlestick close above the line.
Testing $0.600 as a support level is important for the XRP price as it would serve as a boost to the token, which is eyeing $0.700 as its next target. The cryptocurrency warrants a 14.7% rally to achieve this, in addition to breaching the barrier at $0.644.
Should XRP price manage to breach the aforementioned resistance level, it would not be long before the token hits $0.700.
XRP/USD 1-day chart
On the other hand, losing $0.600 would prove to be rather harmful to the altcoin as XRP price would become vulnerable to slipping toward $0.551 or even lower at $0.540. Falling through these support lines would invalidate the bearish thesis, ending the chances of the Ripple token hitting $0.700.
Funding rates suggest Ripple may not dip
Ripple rally would only continue if investors not only seemed bullish but also acted in accordance with the sentiment, which XRP traders are doing right now. According to data obtained from CoinGlass, the funding rate for the Ripple token is seemingly higher above average.
A positive funding rate suggests that long positions dominate short positions as the funding fee received by long contracts exceeds that from short contracts. A higher number of long contracts means that traders are speculating about a price rise, which would support XRP price shooting up toward $0.644.
XRP funding rate
However, the recently released Q3 2023 XRP Markets Report shows that throughout the third quarter, despite XRP price rallying by nearly 73%, the trading volume remained at a low. In fact, it was so low that it averaged a four-year low of $300 to $400 million a day.
This shows that without substantial fundamental bullishness, even sentiments are useless, as any gain registered would be corrected. Up until now, the only driving factor for the price was Ripple’s partial win against the Securities & Exchange Commission (SEC), but support from traders would prove to be a significantly solid catalyst.
Open Interest, funding rate FAQs
How does Open Interest affect cryptocurrency prices?
Higher Open Interest is associated with higher liquidity and new capital inflow to the market. This is considered the equivalent of increase in efficiency and the ongoing trend continues. When Open Interest decreases, it is considered a sign of liquidation in the market, investors are leaving and the overall demand for an asset is on a decline, fueling a bearish sentiment among investors.
How does Funding rate affect cryptocurrency prices?
Funding fees bridge the difference between spot prices and prices of futures contracts of an asset by increasing liquidation risks faced by traders. A consistently high and positive funding rate implies there is a bullish sentiment among market participants and there is an expectation of a price hike. A consistently negative funding rate for an asset implies a bearish sentiment, indicating that traders expect the cryptocurrency’s price to fall and a bearish trend reversal is likely to occur.
Author
Aaryamann Shrivastava
FXStreet
Aaryamann Shrivastava is a Cryptocurrency journalist and market analyst with over 1,000 articles under his name. Graduated with an Honours in Journalism, he has been part of the crypto industry for more than a year now.
