XRP Outperforms Broader Crypto Market

XRP has recorded a notable rally, gaining 5% in the past 24 hours to trade above $2.67, outperforming the broader cryptocurrency market. In comparison, the global crypto market capitalisation has seen a modest 1.6% increase, reaching $3.23 trillion.

The surge in XRP’s price follows a landmark decision by Brazil’s securities regulator, which approved the world’s first spot XRP exchange-traded fund (ETF), sparking optimism among investors.

Brazil Approves First Spot XRP ETF

The primary catalyst behind XRP’s price increase is the approval of the HASHDEX Nasdaq XRP FUNDO DE ÍNDICE by Brazil’s Comissão de Valores Mobiliários (CVM). This ETF will provide institutional and retail investors with a regulated investment vehicle for XRP exposure, removing the complexities of direct ownership.

Key points:

• On 19 February, CVM granted approval for Hashdex’s Nasdaq XRP Index Fund in Brazil.
• The fund is currently in its pre-operational phase, with no official launch date yet announced.
• Brazil, with a population exceeding 200 million and a rising interest in cryptocurrency investments, presents a significant market for the ETF.
• The US Securities and Exchange Commission (SEC) is reviewing multiple spot XRP ETF applications, including those from CoinShares, Bitwise, 21Shares, and Grayscale.

Optimism surrounding a potential US spot XRP ETF approval has also contributed to the market’s bullish sentiment. Betting odds on Polymarket for a US approval have risen from 78% on 17 February to 80% currently. The SEC recently acknowledged Grayscale’s XRP ETF filing and Cboe BZX’s request to list 21Shares’ XRP ETF.

Bloomberg ETF analysts James Seyffart and Eric Balchunas estimate a 65% likelihood of an XRP ETF approval by the SEC in 2025. If granted, such approval would legitimise XRP further and could attract billions of dollars in institutional investment, according to JPMorgan.

Following the ETF approval in Brazil, XRP’s price reacted positively, jumping from $2.51 to an intraday high of $2.74 on 20 February.

XRP Open Interest Rises Nearly 20%

The latest XRP price surge is also driven by increased interest from derivatives traders, who have been placing new positions, indicating rising speculative momentum.

Key points:

• XRP’s open interest (OI) has surged by 18% in the past week, climbing from $3.48 billion on 13 February to $4.11 billion on 20 February.
• In the last 24 hours alone, OI has increased by 6.7%, according to data from CoinGlass.
• The funding rate, which tracks payments exchanged between long and short traders in perpetual futures contracts, has turned positive at 0.0041%, indicating more traders are taking long positions, betting on further price increases.

The growing OI and positive funding rate suggest that leveraged traders are increasing their positions in the XRP market, adding further momentum to the rally.

XRP Eyes 26% Gains Amid Bullish Indicators

Market participants are closely watching XRP’s price action, with technical indicators suggesting the possibility of further gains.

XRP has turned the $2.70 level into support, bolstered by the 50-day simple moving average (SMA). Bulls are now targeting the $2.80 resistance level, a key threshold that could prevent another downturn.

If XRP breaks past $2.80, it could increase the likelihood of retesting its multi-year high above $3.40, which would amount to a 26.5% gain.

However, the relative strength index (RSI) has declined from 54 to 51 in the past 24 hours, indicating that the latest recovery may be a bull trap. Market participants are advised to tread cautiously. A daily close below $2.55 could trigger a sell-off towards the 100-day SMA at $2.30, potentially reversing the recent gains.

As the market awaits further developments, XRP remains in focus, with growing institutional interest and ETF advancements playing a crucial role in shaping its future trajectory.