The last two months have seen a major reset in the XRP open interest, coinciding with the widespread sell-offs that have rocked the market. Looking at past performances, historical data suggests that this open interest reset could be a major break for the altcoin. As prices begin to see some recovery, the reset could present the perfect opportunity for bulls to reclaim complete control of the XRP price and drive it toward higher levels.
How Far Has The XRP Open Interest Crashed?
To know the scale of this reset, it is important to look at the XRP open interest numbers over the last few months. Data from Coinglass shows that back in July, the XRP open interest hit a new all-time high of $10.9 billion as market participation surged to levels not seen before.
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Coincidentally, this rise to new all-time highs coincided with the XRP open interest coming out of another period of reset, eventually leading the XRP price to reach new seven-year peaks. However, it wasn’t long until the bears came knocking once again, and the open interest tumbled as the price fell.
For perspective, the open interest is the total of all XRP futures or option contracts. Effectively, this is a reflection of participation and the number of bets that traders are making on the cryptocurrency. Thus, the higher the open interest, the higher the amount of money invested in XRP derivatives, and vice versa.
Presently, the open interest is sitting at a low $3.75 billion, representing an over 65% crash from its $10.94 billion peak. But this crash could be the reset that the altcoin needs for another recovery, especially as liquidity begins to flow back into the market on account of the US Federal Reserve putting an end to quantitative tightening.
Can The Price Surge To New All-Time Highs?
Earlier in the year, when the XRP open interest had crashed from its January all-time highs, the reset ended up resulting in higher prices. Although the XRP price didn’t break its 2018 record, it came close in July. However, going by this trend, the altcoin could have a while longer to go before there is a surge.
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Following the crash in January, the XRP open interest had remained low for the next five months, with the price showing muted performance alongside it. With only two months since its last peak, the XRP open interest could trend low for a while longer before breaking out. However, if the trend holds, then the resulting rally would push the price above $3 once again.
Featured image from Getty Images, chart from TradingView.com
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