Betwixt Jan. 30 and the early hours of Feb. 1, XRP toll pumped 147%, reaching $0.76 which is its highest level in two months. The move seems to take been fueled by r/Satoshistreetbets, an off-shoot of r/Wallstreetbets.

It seems that speculative social media group-based investing is becoming a trend and then let'south have a look at what triggers might have catalyzed the recent surge in XRP price.

XRP Twitter activeness vs. Price. Source: TheTie

Data from TheTie, an alternative data provider focused on social analytics, shows merely how significant the impact of active Twitter users has been on XRP cost.

Even Gene Simmons, the legendary musician from the stone band, Kiss, told his nearly 900,000 followers:

"Not recommending any of these to anyone. But yes, I besides bought Dogecoin, XRP, and others. Make of it what you volition."

Was there short interest behind this move?

Knowing exactly what triggered the investors to crowd into XRP could uncover a set of criteria that may apply to other cryptocurrencies.

Hedge funds with sizeable short positions are what drew investors to GameStop and AMC stock. By analogous a pump on these companies, buyers knew that would force curt sellers to be liquidated and trigger the start of a strong rally.

Taking a look at Bitfinex's long-to-brusque ratio shows that there's currently $124 million total margin trades combining its USD and BTC based markets. Although that figure is up from $95 million a month agone, information technology's more of import to focus on the percentage favoring shorts.

XRP Longs vs. Shorts. Source: Bitfinex

The ratio seen on Jan. 29 favored longs past 180%, and this is the reverse of what'south necessary for a short clasp. Moreover, in nominal terms, those $25 million margin shorts were not meaning to XRP's $i.55 billion average daily volume.

On the other manus, futures markets held a $277 million open interest, which is flat from the previous month. Merely unlike margin markets, buyers and sellers are matched at all times.

XRP aggregate futures open interest. Source: Bybt.com

As depicted to a higher place, despite the liquidations acquired by the recent 147% rally, XRP'due south open interest surged in nominal terms due to its price appreciation. To understand whether those traders had been using excess leverage on either side, ane should focus on the futures contracts funding rate.

When sellers (shorts) are the ones demanding more leverage, the funding rate goes negative. Therefore, those traders will exist the ones paying upward the fees.

XRP aggregate futures open interest. Source: Bybt.com

Equally shown above, buyers had been using more leverage. Albeit relatively steady over the past 30 days, the last time negative funding rates occurred was Dec. 24 and Dec. 29. Both dates marking local lows afterward substantial price corrections caused by the SEC lawsuit confronting XRP.

Therefore, it is prophylactic to assume that r/Satoshibets did not selection XRP based on margin shorts nor futures leveraged trades.

Apart from being a sub-$10 coin, XRP was one of the virtually afar from its all-time loftier. Information technology's also of import to consider that earlier its recent 1,000% pump, Dogecoin (DOGE) was also trading 90% beneath its $0.078 best high.

Sub-$10 coins. Source: Livecoinwatch.com

While it is indisputable that social investing groups have played some function in the recent rallies seen from Dogecoin, XRP, GameStop and AMC, the information practice not validify the narrative that r/Satoshistreetbets chose to pump XRP because of the high level of shorts on the altcoin.

The views and opinions expressed hither are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, y'all should conduct your own research when making a conclusion.