XRP, shorting Bitcoin and countdown to month-end expiry... targeting $1.55

▲ XRP/AI-generated image

Amidst a series of crashes in the cryptocurrency market, the buying pressure for call options in the XRP options market is overwhelming Bitcoin, signaling the prelude to a historic surge ahead of the month-end expiry.

According to CoinGape, a cryptocurrency specialized media outlet, on May 20 (local time), data analysis from on-chain analytics platform CryptoQuant revealed that the 30-day moving average of whale inflows, indicating the flow of funds from XRP whales, has significantly decreased since early May. Whale accumulation activities, which recently reached their highest level in several months, have now retreated to March levels. Specifically, the volume of whale trading activity, which ranged from 9 million to 13 million XRP per day, has now more than halved to an average of 4 million XRP per day. This is evidence that the overall cryptocurrency market collapse and increased uncertainty have prompted changes in whale behavior.

However, the slowdown in whale activity does not appear to be a distribution phase where they are offloading holdings. This is because the transfer of selling volume to exchanges is also stagnating, with the amount of XRP whale funds flowing into Binance reaching its lowest level in four years. In particular, the Senate Banking Committee's advancement of a US cryptocurrency market structure bill is cited as a crucial factor that caused whales to pause their activity in recent weeks. Looking at CryptoQuant's 30-day moving average of the whale-to-retail ratio, retail investors have entirely taken over the positions vacated by whales, causing this ratio to significantly increase from 0.7 in April to 1.14 this month.

Even as whales maintain a wait-and-see attitude, options market traders are making overwhelming bets on an upward rally for XRP. For options contracts worth a nominal value of $2.5 million, more than 1,800 contracts expiring this Friday have a maximum pain price set at $1.42. Over the past 24 hours, call option trading volume targeting an upward move has overwhelmingly dominated put options betting on a decline, resulting in a very optimistic put/call ratio of 0.69.

The real decisive moment is the month-end expiry scheduled for May 29. According to data from derivatives exchange Deribit, traders are pouring significant capital into $1.48 and $1.55 call options for the May 29 expiry. Considering that the maximum pain price for this expiry is $1.40, there is a very high probability that the XRP price will strongly surge towards the $1.40 mark. Furthermore, Laevitas data shows that XRP options open interest has surpassed $50 million for the first time in approximately two months, clearly igniting upward momentum. This is the exact opposite of Bitcoin (BTC) options traders who are uniformly clinging to pessimistic short positions on the same expiry date.

On the daily chart, the XRP price has rebounded from the lower Bollinger Band and is currently consolidating within a narrow range around the $1.36 level. Although the total trading volume decreased by 8% over the past 24 hours, to activate a full-fledged surge momentum, it must first strongly break through the $1.39 and $1.43 resistance levels.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*