Open interest in XRP rises to $800 million as crypto traders hope Ripple-SEC ruling will bring ‘Alt Season’

Investors are watching the futures market linked to payments-focused cryptocurrency XRP amid hopes that Ripple Labs, the company that issued the token, will win its legal battle against the US Securities and Exchange Commission (SEC) and spur more risk-taking in the broader market.

XRP has risen 57% since March 22, hitting a ten-month high of $0.584, according to CoinDesk data.

Since the rally began, notional open interest, or the dollar value locked in outstanding and active contracts traded on futures and perpetual futures exchanges, has surged nearly 90% to $843 million, the highest since December 2021, data from Coinglass shows.

A rise in open interest that accompanies a rise in price usually suggests an influx of new money on the bullish side and is said to confirm the uptrend. At press time, funding rates – which represent the cost of holding bullish long or bearish short positions – were positive on most exchanges, indicating the dominance of bullish leverage traders. The broader market was also on the up, with bitcoin surging above $28,000 in a move that reversed losses early this week after the US Commodity Futures Trading Commission (CFTC) sued Binance.

“The bullish impulse stems from Ripple’s case against the SEC, where optimism for Ripple’s victory appears to be becoming more dominant,” Lewis Harland, portfolio manager at Decentral Park Capital, said in a market update.

“Maybe that Ripple win sets off a bullish impulse down the (alt-season) risk curve,” Harland added. Alt season is crypto slang that describes a period where alternative cryptocurrencies such as XRP, SOL, DOT, gaming tokens, DeFi coins and meme coins outperform bitcoin and ether.

Ripple and XRP are not interchangeable. While Ripple is a fintech company focused on building a global payment network, XRP is an independent digital asset used for things like online payments and currency swaps.

In late 2020, the SEC accused Ripple Network of selling unregistered securities after the platform sold $1.3 billion worth of XRP. Ripple has long maintained that XRP is a commodity, not a security, as alleged by the SEC.

Securities are more strictly regulated than commodities and require greater transparency and reporting from companies. Therefore, Ripple’s win is likely to bring cheer to the broader market, but a loss could revive risk aversion.

“A win for the SEC could also affect other altcoins as they are likely to be subject to more regulation,” Markus Thielen, head of research and strategy at crypto services provider Matrixport, said in a note to clients on Monday. “However, if Ripple succeeds in this case, XRP’s legality in the US market will be solidified and help drive a price rally.”