Market watchers see the sharp increase in open interest for XRP contracts reflecting a surge in speculative activity, hinting at a potential price breakout in the near term, as the currency trades around the $2.20 level on Tuesday morning.
Ryan told me, the senior market analyst at Bitget: "The open interest for XRP jumped to nearly $5 billion (over the weekend), indicating increased speculative activity as traders enter large positions in the derivatives market."
He added: "This rise indicates potential strong momentum, as market participants prepare for a decisive movement."
Open interest is the number of open, unclosed, or unsettled contracts in the derivatives market, such as futures or options. It represents the number of contracts that are still 'alive' and have not been settled or closed.
Illustrative example: If a trader opens a contract to buy Bitcoin at a certain future price, and another trader opens a corresponding contract to sell, this is considered one open contract and is added to the 'open interest'. If either of them decides to close their contract, the number of open contracts decreases.
What does it mean? An increase in open interest indicates that new money is entering the market and activity is increasing, either through bets on rising or falling prices. Conversely, a decrease indicates that traders are closing their positions and money is leaving the market.
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