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Bitcoin and altcoins have experienced a significant surge in recent days. $BTC climbed above $87,000, while altcoins also saw double-digit increases.
However, this rise was interrupted, and with bond yields reaching their highest levels since 2007, $BTC and altcoins experienced significant pullbacks.
Now, as everyone watches to see if this decline will continue, Coinbase Markets has released a noteworthy analysis regarding $XRP.
Bullish Expectations in $XRP Options are Strengthening!
Following the recent surge in the $XRP market, upward expectations in derivatives have increased significantly. According to Coinbase Markets data, the one-week implied volatility difference between $XRP call and put options reached 9.3 volatility points. This level is in the top 5% of readings seen in the last year.
This movement indicates a sharp increase in demand for call options on $XRP, driven by expectations of further gains. This shift also comes after $XRP rose by approximately 15% to 18% in the past week. However, a 9.3 percentage point difference doesn’t necessarily mean $XRP will rise another 9.3%.
In addition to the activity in the options market, it was reported that total open positions in $XRP futures also rose to $4.1 billion. CME, a key indicator of institutional trading activity in the market, took the lead in $XRP futures, surpassing Binance.
Risk of “Crowded Positions” After the Rally!
Coinbase Markets also notes that the surge in demand for call options following the recent rally has strengthened bullish expectations, but could also increase the risk of crowded positioning in the market.
In other words, if a large number of investors take long positions simultaneously, price movements can become more volatile if expectations are reversed.
*This is not investment advice.