DOT and XRP are both relatively less volatile assets in the crypto market, which is why it is often used by traders who have slightly less risk tolerance than others.
However, when compared to cryptocurrencies with bigger market capitalization, the two assets are still considered volatile, which is why it preferred less by big traders who want very little volatility in their trade.
The two assets fall in the same category in terms of volatility, which is why it is sometimes hard to differ, whether traders prefer DOT or XRP to trade, especially in the futures market.
Comparing Trader’s Volume
Looking at the futures market, which has more traders than the regular spot market, it can be seen that in terms of transaction volume XRP has more than DOT.
The data can be seen through the open interest data, where when compared it shows that there is almost three times the amount of volume on XRP compared to DOT in terms of the futures market.
DOT’s Open Interest Chart / Source: Coinglass
In terms of DOT’s open interest, there are only around $300 Million worth of contracts being open daily in 2024, which is stool high compared to other cryptocurrencies, but not higher than XRP.
However, DOT has an advantage in terms of the trend of this open interest data, where the open interest data seems to be trending upwards, which is a good sign for the asset.
XRP’s Open Interest Chart / Source: Coinglass
XRP’s open interests currently stand at around $800 Million to $900 Million, which is a lot higher than DOT’s.
But one this to note is that the trend of this open interest seems to be going down, where there are fewer and fewer XRP Futures Contracts being opened by the day.
This can mean that overall traders prefer XRP more than DOT but that does not mean when DOT goes up XRP will go up even higher as their movement can differ as they have little to no correlation.
Which One is More Volatile?
One of the reasons why XRP is preferred by traders is probably the fact that it has less volatility than DOT.
According to data from Cryptorank, the volatility of XRP is less than DOT but not a significant matter as the difference in volatility is only by 1 %.
This means that when XRP moves by one percent, DOT moves by 2%, which is less preferred by traders who have a preference for less risky assets.
XRP and DOT fall in the large market capitalization of cryptocurrencies, which is why traders in the category usually are traders who have a small risk tolerance.
This is why XRP is more preferred than DOT currently, because of the difference in volatility in both assets.
Usually, when traders want bigger volatility they will go to assets with significantly lower market capitalization such as meme coins or tokens in lesser-known blockchains.
Conclusion
So when looking at the two assets, it is important to note that most of its buyers in the futures and spot markets are traders and investors who want less volatility, which is why in comparison of the two, XRP is preferred.
However, other factors could change the preference between the two, which are news and other developments in the project.
But, those factors usually play a role when talking about the long to medium-term movement. In the sense of short-term movement, volatility is the key factor when deciding to trade an asset.
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