Cryptocurrency markets continue to feel the tremors of the brutal April Fools’ Day price crash, with XRP taking a major hit. According to Coinglass data, a whopping $6 million worth of XRP contracts were liquidated in the last 24 hours. This liquidation frenzy may be due to the sharp price decline of XRP on April 1st.
The new month started with XRP trading around $0.61. However, the domino effect triggered by Bitcoin’s plunge below $67,000 sent shockwaves through the market, sending XRP down along with other major cryptocurrencies.
A closer look at the liquidation data reveals a clear trend. A whopping $5.6 million of the liquidated contracts were long positions, indicating that traders who had bet on XRP’s price rising were kicked out of their positions. Conversely, the liquidation value of short positions that benefit from falling prices was significantly lower at $324,200.
Market Preparation: XRP’s Uncertain Path
Interestingly, the situation in the spot market, where actual cryptocurrency is traded, was contrasting. XRP’s trading volume surged nearly 60% during the same period that this large liquidation occurred.
A surge in volume may suggest increased buying activity, but a closer look shows that selling pressure is dominant. Price action suggests that a significant portion of this volume resulted in selling rather than accumulation.
XRP price down in the last week. Source: CoinMarketCap
The trend of increasing volume coupled with falling prices suggests that XRP’s downward momentum may continue. If this selling pressure continues to diminish, analysts predict that the price of XRP is likely to fall towards the $0.55 support level.
In these circumstances, the future of XRP appears uncertain. Tokens face the risk of being caught in a market carnage. However, it is important to acknowledge opposing viewpoints. Some analysts take a different view and predict a potential near-term upside for XRP with a target price of $0.74.
Bitcoin is now trading at $66.117. Chart: TradingView
XRP’s stable funding rate amid bearish mood
Meanwhile, amid bearish sentiment, technical analysis shows glimmers of optimism. Despite the high liquidation value, XRP’s funding ratio has remained stable. Put more simply, a positive funding ratio means that traders holding long positions (expecting prices to rise) are currently paying a premium to traders holding short positions (expecting prices to fall).
Source: Coinglass
This can be interpreted in two ways. This may suggest that some traders still believe in a potential XRP price increase, or it may indicate that short sellers are willing to pay a premium to maintain their bearish positions.
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According to NewsBTC’s analysis, XRP’s funding ratio is currently at 0.030, slightly higher than the expected ratio of 0.029. If the funding rate is positive while the price continues to fall, those holding long positions may not receive their usual funding payouts. This scenario could further exacerbate the bearish bias and empower aggressive sellers.
Featured image from Pexels, chart from TradingView
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