XRP, the digital asset managed by Ripple Labs, is trading at its highest level in three years amid a surge in investor optimism driven by shifting regulatory expectations and broader crypto market momentum. With the cryptocurrency reaching $1.06—up over 80% week-to-date despite a dip from its $1.20 peak—the momentum reflects growing confidence in XRP’s future, especially as political and regulatory winds appear to be changing in the United States.
The rally follows former President Donald Trump’s victory in the recent U.S. election, which has reinvigorated sentiment across the digital asset space. While meme coins continue to dominate performance charts, large-cap cryptocurrencies like XRP are also experiencing significant gains. This shift is particularly evident in the futures market, where open interest for XRP has surged to nearly $2 billion, a record high according to data from CoinGlass.
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Understanding Open Interest and Market Momentum
Open interest refers to the total number of outstanding derivative contracts—such as futures or options—that have not yet been settled. A rising open interest signals increased market participation and growing speculative interest. In XRP’s case, this surge suggests that traders are actively positioning themselves for potential price increases.
Nick Foster, founder of Derive, a DeFi protocol focused on on-chain options, explained that the spike in open interest is a strong bullish signal. "Elevated open interest in XRP futures indicates heightened trader engagement, often a precursor to major price moves," he said. "When combined with consistently positive funding rates, it shows new participants are entering the market, drawn by what they see as compelling trading opportunities."
Funding rates reflect the cost of holding leveraged positions in perpetual futures markets. Sustained positive rates suggest that long (buy) positions dominate, indicating bullish sentiment.
One key strategy fueling this activity is basis trading, where traders exploit price differences between XRP’s spot price and its futures contracts. As liquidity and volatility increase, so do the potential profits from such strategies—further attracting institutional and retail traders alike.
Regulatory Uncertainty and the SEC Lawsuit
A major factor influencing XRP’s price trajectory has been its prolonged legal battle with the U.S. Securities and Exchange Commission (SEC). In December 2020, the SEC filed a lawsuit against Ripple Labs, alleging that the company conducted an unregistered securities offering through the sale of XRP.
However, in a landmark ruling in July 2023, a federal judge determined that XRP sales to retail investors did not constitute securities offerings, though institutional sales violated securities laws. Ripple was fined $125 million, but the partial victory provided a significant boost to market confidence.
The SEC has since appealed the decision, with a deadline set for January 2025 for its final brief submission. The outcome of this appeal remains uncertain—but anticipation is building around another potential development: the possible resignation of SEC Chair Gary Gensler.
Market observers speculate that Gensler may step down shortly after January 20, 2025, when the new presidential administration takes office. Trump has publicly stated his intent to "fire Gary Gensler on day one," though legally he cannot directly dismiss an independent agency chair. Still, analysts believe Gensler may choose to resign voluntarily within the next six months.
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Political Shifts and Institutional Outlook
The potential leadership change at the SEC has profound implications for Ripple and XRP. Many in the industry view Gensler as having pursued an aggressive enforcement stance—what some describe as a “crusade”—against crypto firms operating in regulatory gray areas.
With a new administration likely to favor clearer, more innovation-friendly policies, there’s growing hope that the SEC could adopt a more balanced approach toward digital assets. For XRP specifically, this could mean:
- Reduced regulatory overhang
- Greater clarity on classification (security vs. commodity)
- Improved chances for U.S.-listed spot exchange-traded funds (ETFs)
While no XRP ETF has yet been approved, Bitwise has already filed an application—fueling speculation that approval could follow if the regulatory climate improves.
Pratik Kalla, Portfolio Manager and Head of Research at Apollo Crypto, believes current price action reflects these expectations. "The recent surge in XRP isn’t just technical—it’s fundamentally driven by macro-level speculation," Kalla told Decrypt. "Investors are pricing in the possibility of Ripple’s CEO Brad Garlinghaus joining Trump’s crypto advisory team, which would signal strong institutional support."
Such developments would not only enhance Ripple’s influence in shaping national policy but also validate XRP’s role in the future of global payments and blockchain infrastructure.
Why Traders Are Watching Closely
Beyond politics and regulation, several on-chain and market indicators point to strong underlying demand:
- Increased exchange inflows: More XRP is being transferred to exchanges, suggesting traders are preparing for active positions.
- Rising derivatives volume: Futures trading volumes have spiked across major platforms.
- Growing open interest: As noted, nearly $2 billion in open contracts show strong commitment from leveraged traders.
These metrics collectively suggest that the current rally is not merely speculative noise but part of a broader shift in market structure and perception.
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Frequently Asked Questions (FAQ)
Q: Why is XRP’s price rising now?
A: The price increase is driven by a combination of factors: Trump’s election win, speculation about SEC Chair Gensler’s resignation, progress in Ripple’s legal case, and growing interest in XRP futures.
Q: What does high open interest mean for XRP?
A: High open interest indicates increased trader participation and leveraged positions, often signaling strong market conviction. It can lead to higher volatility but also reflects growing liquidity and institutional interest.
Q: Could an XRP ETF be approved in the U.S.?
A: While no approval has been granted yet, filings by firms like Bitwise suggest growing momentum. A change in SEC leadership could significantly improve approval odds.
Q: Is XRP considered a security?
A: A 2023 court ruling found that XRP is not a security when sold to retail investors, though institutional sales were deemed violations. The SEC is appealing this decision.
Q: How does political change affect cryptocurrency regulation?
A: New administrations often reshape regulatory priorities. A pro-innovation government may push for clearer rules, reduce enforcement pressure, and support crypto-friendly policies.
Q: What role does basis trading play in XRP’s market dynamics?
A: Basis trading exploits price differences between spot and futures markets. As XRP’s derivatives market grows, such strategies become more profitable and attract sophisticated traders.
With technical strength, regulatory hope, and political tailwinds converging, XRP is emerging as one of the most closely watched assets in 2025. Whether this momentum sustains will depend on both court outcomes and policy shifts—but for now, market participants are positioning aggressively for what could be a transformative year.