XRP, Ripple's cryptocurrency focused on global payment solutions, posted an extraordinary price rally, pushing its price to levels last seen in the 2021 crypto boom. At the time of writing, the token, now ranked 5th with a market capitalization of $96 billion, is trading for $1.7. The figure represents a 15% gain in the past day and week.

Interestingly, XRP has soared 225% in the past month alone, according to the data from CoinMarketCap, and now the bulls are targeting the psychological price of $2.

The token's bullish sentiment is reportedly driven by a combination of legal optimism, ETF speculation, and heightened trading activity. As the token hovers around $1.70, traders and investors are speculating about the possibility of the price reaching $2 or even beyond.

Optimism for Ripple

Ripple's ongoing legal battle with the US Securities and Exchange Commission (SEC) has been a defining narrative for XRP. Recent developments suggest the saga may finally be nearing resolution.

On the fundamental aspects, the announcement that SEC Chair Gary Gensler will leave office on January 20, the same day Donald Trump will be inaugurated, has fueled hopes for a more crypto-friendly regulatory environment.

In 2020, the SEC charged Ripple Labs, the entity behind XRP and two of its executives, for allegedly raising $1.3 billion through the sale of unregistered securities offerings. The crypto is now hoping that the SEC will dismiss the lawsuit against Ripple under a new administration.

Secondly, XRP has benefited from asset management firms, which are eying the possibility of listing its exchange-traded fund (ETF). Bitwise Asset Management recently filed for a multi-crypto ETF, allocating 1.5% of its holdings to XRP, Cryptopotato reported. Historically, ETF approvals have triggered significant price increases for underlying assets.

XRP's meteoric rise isn't driven solely by legal and regulatory news. South Korean exchange exchanges have emerged as major hubs for the token's trading, accounting for a significant portion of the billions of its trading volume, Bitcoin.comNews reported.

Open Interest in XRP

Open interest in XRP futures contracts has also hit record highs, signaling strong confidence in further price movement, data from Coinalyze shows. The percentage change for perpetual and futures contracts has jumped 31% and 21%, respectively.

Although the anticipated launch of an XRP ETF depends on regulatory approval, the anticipation of new developments within Ripple's ecosystem has provided an additional boost to the XRP price.

WisdomTree, another prominent New York-based asset management firm, filed for an XRP exchange-traded fund (ETF) in Delaware this month. Canary Capital and 21Shares have also joined the race.

While XRP's performance has been impressive, analysts have warned of potential corrections. Massive transfers between unknown wallets, including a recent 35 million XRP transaction, have raised concerns about possible market manipulation.

With the potential for an ETF launch, a favorable outcome in the Ripple-SEC case, and growing investor confidence, XRP could achieve the $2 price milestone.