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XRP Leading Alt-Coin Rally: A Closer Look at the Surging Cryptocurrency

XRP has led a resurgence in the cryptocurrency market while anticipation surrounding Ripple's Swell conference, and partnerships with central banks, while the DeFi sector also experiences renewed interest and lending demand due to surging interest rates for stablecoins.

XRP is leading a crypto surge on anticipation of central bank partnerships.
Creator: gopixa | Credit: Getty Images

The cryptocurrency market is witnessing a surprising resurgence in DeFi as XRP, the native token of the Ripple ecosystem, takes the lead in an alt-coin rally.


This rally comes after the DeFi sector struggled to recover from high-profile collapses and increased interest rates in traditional markets. Aave, one of the largest DeFi lenders, has reported interest rates of over 10% for stablecoins like USDC and Tether, indicating growing demand for leveraging crypto assets.


XRP Surges


XRP's recent rally of 11% to $0.726 on Monday has contributed to the resurgence of DeFi. Data from Coinglass suggests that the open interest-weighted funding rate for XRP and other tokens has turned positive, attracting speculators to bet on a price rally.


This surge in lending demand on DeFi platforms can be attributed to a variety of factors, as Tarun Chitra, co-founder of crypto risk modeling platform Gauntlet explained by stating:


"There have been a number of 'wealth effects' that usually cause lending demand to go up when there's a huge run-up in a particular token."

The resurgence of DeFi and positive funding rates in the perpetual futures market are creating arbitrage opportunities for traders. Spencer Hallarn, a derivatives trader at crypto investment firm GSR, notes that this trend speaks to the growing demand for crypto ownership in the derivatives market. Additionally, the blowups of centralized lenders like BlockFi last year have left DeFi lenders as some of the few remaining options for leveraged crypto trades.


Noelle Acheson, author of the Crypto Is Macro Now newsletter, emphasizes that this resurgence is driven by a pickup in investor interest and market volatility. The crypto market's positive momentum, led by Bitcoin's recent 28% rally in October, has spread to smaller tokens like XRP, which are now gaining traction.


In this evolving landscape, DeFi and cryptocurrencies like XRP are seeing a resurgence, as investors seek opportunities for leveraged trades in a rapidly changing market.


Reasons Behind the Surge


The surge began after multiple positive developments, including Ripple's approval to operate in the free trade zone of the Dubai International Financial Centre (DIFC). This approval lends credibility to XRP's use by financial institutions in the DIFC, enhancing its status within the financial ecosystem.


Excitement is also building around Ripple's upcoming Swell conference, scheduled for November 8 and 9 in Dubai. Speculations suggest that Ripple might announce plans for an Initial Public Offering (IPO) during the event, supported by the recent DIFC approval. Previous Swell conferences have often had a positive impact on XRP's price, and the current market sentiment is mirroring this trend.


Furthermore, Ripple is forging partnerships with central banks worldwide and making its mark in the realm of CBDCs. The National Bank of Georgia is the latest to choose Ripple for its CBDC project, further solidifying Ripple's presence in the world of digital currencies.


Regarding the legal front, Ripple's dispute with the U.S. Securities and Exchange Commission (SEC) seems to be heading towards a possible settlement. Legal experts believe that the SEC might offer a settlement deal that could range from hundreds of millions of dollars to $20 million, significantly less than the initial $770 million penalty sought by the regulator.


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