A huge XRP derivatives play is betting that its price won’t go anywhere by the end of June, even though macro headwinds and regulatory developments suggest a surge in volatility.
The move hit the tape as a single-block trade on crypto exchange Deribit, meaning it was a large transaction executed over-the-counter in a privately negotiated deal to prevent a huge increase in price.
This trade likely involved a whale or an institution using what is known as a “short straddle” strategy by shorting (selling) 1.5 million contracts of both $1.40 call and put options expiring in June. 26.
By selling both calls and puts, the trader is effectively providing insurance against sharp price fluctuations away from the $1.40 strike. The trader received an upfront premium of $224,500 to handle this volatility risk.
If XRP remains near $1.40 by June 26, the trader will keep that amount as profit.
Therefore, the bet is essentially on volatility to remain lower, with prices resting near $1.40. The payments-focused cryptocurrency has largely traded between $1.30 and $1.50 since February, according to CoinDesk data.
The strategy is not without risk. A sharp move in either direction will make the position unprofitable, requiring the trader to cover losses caused by option buyers.
Yet, a number of factors point to the potential for instability. Inflation concerns in the US and other parts of the world are pushing government bond yields higher around the world, discouraging investments in stocks, cryptocurrencies and other risky assets.
Meanwhile, the Senate Banking Committee advanced the Clarity Act, a landmark US legislative proposal designed to establish a clear regulatory framework for cryptocurrencies and digital assets. The bill now heads to a full Senate vote.
Stuart Alderotti, chief legal officer of Ripple, which uses
XRP is often seen as a US crypto play, as Ripple is based in San Francisco and is one of several companies that have received conditional approval from the Office of the Comptroller of the Currency (OCC) to establish the Ripple National Trust Bank (RNTB).