XRP Liquidation Imbalance Hits 5,999% as Price Eyes Rebound
XRP experienced a significant short squeeze, with $701,690 worth of liquidations occurring in a four-hour period and a 5,999% imbalance between short and long liquidations. The price spiked slightly to $2.45, creating buying pressure but has yet to see further substantial gains. Historically, such imbalances have led to significant price surges. However, traders are advised to avoid high leverage as XRP remains volatile. Trading volume dropped over 23% to $4.07 billion, and the price is currently at $2.44, down by 0.55%. The potential launch of a spot XRP ETF could drive further price rallies if adoption increases.
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Massive Liquidation in XRP Trading
XRP traders faced a massive liquidation on the four-hour chart, creating an imbalance of 5,999%. According to data from CoinGlass, a total of $701,690 worth of XRP was wiped out within a very short time frame of four hours.
Liquidation Imbalance Analysis
The data from CoinGlass revealed that short traders dominated the liquidation scenario, accounting for $690,370 worth of liquidations compared to only $11,320 from longs, leading to the extreme 5,999% imbalance. While not large in absolute terms, this stark difference suggests an overcrowded bearish sentiment that was unexpectedly overturned.
Consequences of the Short Squeeze
As the XRP price spiked to $2.45, short sellers were caught off guard. The liquidations triggered forced buying, which subsequently added massive buying pressure, creating a feedback loop. The scale of the liquidation ($701,690) in such a short time period points to volatility spikes and highlights the characteristics of a short squeeze.
Potential Impact on XRP Prices
Historically, such liquidation imbalances often precede 20-50% price pumps for XRP, as it clears out weak hands and stabilizes the market for potential upside momentum. However, despite the liquidation, the XRP price remains at $2.44, showing a 0.55% decline over the past 24 hours, with trading activity remaining low.
Investor Advisory
This event highlights the risks of high leverage, with over 80% of retail traders losing money on derivatives. Investors are advised to avoid high leverage during volatile periods. The trading volume for XRP has plunged more than 23% to $4.07 billion in the same period, emphasizing low investor activity.
Future Outlook: XRP ETF and Price Rebound
The upcoming launch of the spot XRP ETF could act as a major trigger for potential price rallies. This fund, designed for institutional investors, is expected to bolster adoption and could signal a rebound in XRP prices, provided adoption levels remain high.