Ripple’s price has been trading within a relatively narrow range of around $0.50 for the past week, begging the question if there’s a massive move around the corner.
From a technical perspective, there are two important metrics to keep an eye out for, but there’s also the fundamental side of things, so let’s have a look.
One of the more interesting metrics to observe in derivatives markets is the ratio between long and short positions.
It does exactly what it sounds – tracks the number of long positions compared to short positions. Data from Coinglass reveals that bulls are currently dominating the market, accounting for 70% of the total positions.
This could be perceived as good news, outlining the positive sentiment in the market. But it can also be a warning sign – the excessive number of long positions in a market can also signal the risk of a “long squeeze.” This is an event where the price starts moving downwards and liquidates positions as it goes, triggering more liquidations and more selling pressure – a cascade of a sort. Just to compare – most of the other large-cap cryptocurrencies have this ratio at 50/50 at the time of this writing.
Another thing to consider is the open interest. It can be used to gauge whether or not volatility is coming. The larger the number, the larger the potential of high volatility is.
In the past couple of weeks, the open interest has been climbing slowly, which might be indicative of a relatively calm market ahead.
But there’s one fundamental trigger that could put a dent in technical analysis.
Unlike many of the other large-cap cryptocurrencies, XRP’s parent company – Ripple Labs – is involved in a massive lawsuit with the US SEC.
Any positive development is likely to significantly improve XRP’s price – as we’ve seen it happen in the past.
On the other hand – negative news might also send the price tumbling.
That said, an important development took place a few days ago, when the SEC scored a minor victory. The court compelled Ripple to submit certain financial information – something that the company was fighting against.