The two most optimistic events that Ripple (XRP) supporters have been waiting for occurred in 2025, but XRP continues to underperform compared to the broader crypto market. On March 6, XRP was listed as a candidate for the 'Digital Asset Reserve' of the United States, and Ripple Labs settled a years-long complaint with the U.S. Securities and Exchange Commission (SEC) on the 8th.
XRP (green) compared to crypto market capitalization | Source: TradingView
XRP fell 6% in the three months leading up to May 22, while the total crypto market capitalization rose by 10%. Traders remain hopeful for a price increase of 45% to $3.5, as derivatives indicators show rising confidence.
Utilizing increased leverage ahead of the potential listing of the XRP spot ETF
Total open interest (OI) for XRP futures on major exchanges rose to 923 million XRP on May 22, an increase of 31% from two weeks prior. This $2.2 billion position in the futures market indicates growing interest from traders, but it is not necessarily a sign of optimism, as these instruments can also be used to speculate on XRP's bearish trends.
XRP futures OI on major exchanges | Source: CoinGlass
Some traders believe the increasing demand for leveraged XRP positions indicates growing institutional interest, especially as many issuers have filed to list the XRP spot ETF in the United States. However, the final decision from the U.S. Securities and Exchange Commission (SEC) is expected in October.
Excessive demand for bullish leveraged XRP positions has caused the funding rate to turn positive, meaning that buyers (Long) must pay to hold the position. Since traders often have an optimistic mindset, an annual funding rate of 7% to 14% is considered normal in a neutral market, while FOMO (fear of missing out) periods can push this index above 50%.
Annual funding rate of XRP futures | Source: Laevitas.ch
The annual funding rate surged to 19% on May 22, nearly reaching a six-month high. However, the current level of optimism is still far from the 100% annual funding rate on December 4, 2024, when XRP experienced an impressive 7-day surge from $1.33 to $2.9. While not negative, the current level still leaves open the possibility of expanding bullish positions in the XRP futures market.
Favorable regulations open the door for partnerships and acquisitions
One reason XRP's price has only seen slight increases is due to multiple refusals by U.S. Senator Cynthia Lummis – Chair of the Senate Banking Subcommittee on Digital Assets – to meet with Ripple representatives. On May 19, Ripple CEO Brad Garlinghouse urged this Congresswoman to 'reconsider and lead for the entire crypto industry,' while discussing ways to 'help the U.S. become the cryptocurrency capital of the world.'
So far, nothing can stop XRP from reaching the milestone of $3.5 or even higher, as Ripple Labs is no longer facing direct threats from regulators – paving the way for partnerships and acquisitions. In the past, XRP has reacted very positively after such announcements, and the $2.2 billion OI in the futures market could help push XRP's price beyond the current all-time high of $3.84.
