Crypto Crash Causes $6M XRP Liquidation Amid Rising Trading Volumes

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The world of cryptocurrency was jolted this April Fools’ Day with a dramatic price crash, resulting in palpable loss, particularly to XRP, one of the major players. Notably, a total of $6 million in XRP contracts were liquidated within the last 24 hours, as revealed by Coinglass data. Investigating the cause of this liquidation frenzy, one can easily pin it to the steep decrement in XRP’s price following the ominous happenings on the first of April.

At the brink of the new month, XRP started trading at about $0.61. As fate would have it, Bitcoin, the torchbearer of the cryptocurrency world, slipped below $67,000, triggering a domino effect that sent shockwaves rippling across the market. XRP didn’t escape this downturn, with its value spiraling down alongside other established cryptocurrencies.

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Closely dissecting the data around the liquidation reveals prevalent trends. A mammoth $5.6 million part of the liquidated contracts were tied to long positions, suggesting that traders who had invested hoping for XRP’s price to surge were, unfortunately, obligated to withdraw. Short positions, investments counting on the price to drop, marked a significantly smaller liquidation value— a scanty $324,200 in comparison.

The landscape of the spot market— where real-time exchange of cryptocurrency occurs— surprisingly painted a dissonant scenario. Simultaneous to these hefty liquidations, XRP’s trading volume witnessed a substantial increase of nearly 60%. A substantial volume surge could be indicative of upraised buying activity, but a thorough examination implies a dominance of selling pressure. A huge chunk of this volume was unambiguously subjected to selling rather than accumulation.

The intersection of growing volume with a depleting price sends a clear message: XRP could continue to face a downward momentum. If the selling pressure remains relentless, market analysts suggest it could push XRP’s price downward towards the $0.55 support level.

The seeming bearish aura raises speculations on the future of XRP. The threat of getting caught in a market massacre looms overhead but, it’s important to observe the diverse perspectives shaping the market outlook. Some analysts forecast a potential short-term upside for XRP centered at a price target of $0.74.

Amid the bearish climate, observation of XRP’s stable funding rate offers a glimmer of optimism, revealed by technical analysis. A positive funding rate implies that traders maintaining long positions and anticipating a price increment are paying a premium to those holding on to short positions and predicting a price drop.

This might suggest that some traders remain optimistic, anticipating that the XRP’s price could rise further. Alternatively, it can denote that short sellers are seemingly ready to pay a premium to sustain their bearish prospects.

In terms of XRP’s Funding Rate, it presently aligns at 0.030, slightly above the projected rate of 0.029. If the Funding Rate manages to maintain the positive trajectory even as the price continues to decline, those sticking with long positions may fail to receive the common funding payments. Such an outcome could inadvertently boost the bearish trend, thereby providing aggressive sellers with a reinforced platform.