A large trader has placed a major wager that the price of XRP (XRP-USD) will stay almost perfectly flat for the next several weeks. The trader used a method called a “short strangle” on the Deribit exchange, banking on the idea that the cryptocurrency will remain stuck near $1.40 through June 26. For taking on this risk, the trader walked away with an upfront payment of roughly $224,500.
Claim 55% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
The Strategy behind the Trade
This massive deal occurred as a private, over-the-counter transaction to ensure it did not suddenly push the price of the asset around. The trader sold 1.5 million contracts for both the $1.40 call and put options, effectively acting like an insurance provider. They are betting that the market will stay calm. If the price of XRP hovers near $1.40 until the expiration date, the trader keeps the entire $224,500 as profit.
However, this is not a risk-free gamble. If XRP’s price makes a sudden, sharp jump or a deep dive, the trader loses that protection and could face significant losses. The bet relies entirely on XRP staying within the $1.30 to $1.50 range where it has spent much of its time since February.
Volatility Is on the Horizon
The bet is particularly interesting because the market is currently facing several factors that usually cause big price swings. For one, rising inflation in the U.S. and higher government bond yields are making investors nervous about keeping money in riskier assets like cryptocurrencies.
At the same time, major political changes are happening in Washington. The U.S. Senate Banking Committee recently moved forward with the CLARITY Act, which aims to create a new, official set of rules for the entire digital asset industry. Because Ripple, the company behind XRP, is based in San Francisco and is actively working to set up its own national bank, this bill is a very big deal for the future of the token. While the whale seems convinced that things will stay quiet, the market is bracing for a potential storm.
At the time of writing, XRP’s price is sitting at $1.3663.
