XRP price could rally 17% on Ripple’s USD Stablecoin Launch 

Insights:

XRP price surged 3% within the daily timeframe on April 4, after Ripple Labs announced plans to launch its own native Stablecoin. On-chain data analysis reveals how investors began piling on bullish bets following the news.

Is XRP price on the verge of a major breakout?

Ripple announces plans to launch Native Stablecoin

On April 4, Ripple labs announced plans to launch its own native stablecoin on the XRP ledger blockchain network.

The Ripple stablecoin, expected to be launched later this year, will be pegged 1-to-1 to the US dollar, and backed by cash equivalents including U.S. dollar deposits, U.S. government bonds and other low-risk investments, according to the company’s announcement.

The stablecoin market is booming – around $150B today, and projected to soar past $2.8T by 2028. There’s a clear demand for trust, stability, and utility.
That’s why later this year we’re launching a stablecoin pegged 1:1 to the USD on the XRP Ledger and Ethereum.

– Ripple labs posted on X (Twitter), April 4, 2024.

Recently, the global stablecoin market cap reached the $150 billion mark, with Tether’s USDT occupying over 69.5% of the market share with $106 billion valuation. Meanwhile Circle’s USDC has cumulative market cap of 21.5%.

Ripple’s stablecoin is expected create a more trustworthy and efficient  alternative to asset like Tether’s (USDT) and Circle’s (USDC).

But more importantly, it is expected to help the ecosystem capture more value, on ramp new investors, and enhance XRP’s positions as a global payments solutions.

XRP traders anticipating price rally on Ripple’s Stablecoin Launch

Early on-chain movements observed on April 4 shows that XRP holders are positioning for a positive price impact of the Stablecoin launch announcement.

While the expected launch is still months away, markets data shows that XRP witnessed a noticeable uptick in bullish activity, both in the spot and derivative market.

Firstly, XRP Open Interest, the total value of capital invested in the futures derivatives markets grew from $899 million on April 4 to hit $981.2 million within 24-hours of Ripple’s proposed stablecoin launch announcement.

Essentially, the $82 million grown in Open Interest, represents a 9% increase, which far outpacing the 3% growth in XRP price, within the daily timeframe.

Increased open interest indicates that new money is entering the market, suggesting that investors initiating new positions are rate faster than those closing existing ones. This influx of fresh capital can provide the necessary momentum for sustained price movements.

But more importantly, strategic investors often interpret it as a vital bullish signal when open interest outpaces price increase by such a wide margin.

When open interest grows faster than price, it often means that traders are willing to bet on the asset’s future performance, even if the current price has not yet caught up with these expectations.

XRP price forecast: 50% rally on  stablecoin launch?

XRP received fresh capital inflows of over $82 million within 24-hours of Ripple’s stablecoin launch announcement despite spot prices remaining below $0.60. If the trend persists and the market keeps gaining depth and more liquidity, an XRP price breakout toward $0.70 could be imminent.

But to validate this optimistic XRP price forecast, the bulls must first reclaim the $0.65 level. However, the Liquidations heatmap data shows a looming resistance sell-wall at the $0.63 territory.

As seen above, over $33 million worth of leveraged XRP short positions could be liquidated if XRP price surges above $0.63 mark. If those holders trigger stop-loss orders to mitigate potential losses, the ensuing sell-off could slow down XRP price rally above $0.65.

But if the bulls can stage a decisive breakout above $0.65, a 17% rally from the current $0.58 price level towards $0.70 could be on the cards.