XRP, the cryptocurrency associated with Ripple Labs, is displaying signs of renewed bullish momentum. Its funding rate has returned to the positive region, according to the latest data from Coinglass.
The funding rate is a tool the crypto futures market uses to balance the price between the spot and futures markets. When this rate is positive, it suggests that more traders are betting on XRP price to rise. Hence, they are taking long positions.
In contrast, when this rate is negative, traders are bearish about XRP's price. Hence, they're taking short positions in the belief that the crypto's price will drop.
The XRP funding rate has shown multiple variations over the past few days. On April 30, it was in the negative zone for a brief period, a sign that sellers were in control of the XRP market. However, the tide turned on May 1, with the rate moving above zero.
This change indicates that the bulls are back in control of the XRP derivatives market. This funding rate is important as it proves that traders’ confidence in XRP is growing.
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Even though this rate doesn't provide a guarantee that a price rally is about to happen, it is usually a leading reflection of market sentiment. The positive funding rate indicates that traders won't mind paying a premium to hold long positions as they expect XRP's price to rise soon.
Following the positive funding rate change, XRP's price has also increased slightly. It's up 1.8% in the last 24 hours and trades at $2.23 at the time of writing, according to CoinGecko data.
Three bullish signs for XRP
There are several factors contributing to this renewed optimism. The wider crypto market has been displaying signs of recovery.
CoinGecko data shows that Bitcoin and the top nine coins by market cap have noted positive price changes in the last 24 hours.
In addition, there has been a notable rise in trading volume for XRP futures, a sign of increased interest from retail and institutional investors.
Meanwhile, the MACD technical indicator also supports this bullish momentum. Current TradingView data shows that the MACD line is currently above the signal line, while the MACD histogram bars are positive and increasing.
