The cryptocurrency market continues to feel the tremors of a brutal April Fools’ Day price crash, with XRP taking a significant hit. In the last 24 hours, a staggering $6 million in XRP contracts were liquidated, according to Coinglass data. This liquidation frenzy can be attributed to the sharp price decline experienced by XRP on April 1st.
The new month began with XRP trading around $0.61. However, a domino effect triggered by Bitcoin’s plunge below $67,000 sent shockwaves through the market, dragging down XRP along with other major cryptocurrencies.
Looking deeper into the liquidation data, a clear trend emerges. A whopping $5.6 million of the liquidated contracts were long positions, indicating that traders who bet on XRP’s price increasing were forced out of their positions. Conversely, short positions, which profit from price decreases, saw a significantly smaller liquidation value of $324,200.
Market Contrasts: XRP’s Uncertain Path
Interestingly, the situation on the spot market, where actual cryptocurrency is bought and sold, presented a contrasting picture. XRP’s trading volume surged by nearly 60% during the same period when these hefty liquidations occurred.
While a surge in volume might suggest increased buying activity, a closer look reveals a dominance of selling pressure. The 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
This trend of rising volume alongside a falling price indicates that the downward momentum for XRP might persist. If this selling pressure continues unabated, analysts predict a potential drop in XRP’s price towards the $0.55 support level.
With these conditions in play, XRP’s future appears uncertain. The token faces the risk of getting caught in a market bloodbath. However, it’s important to acknowledge dissenting viewpoints. Some analysts hold a different perspective and predict a potential short-term upside for XRP, with a price target of $0.74.
Bitcoin is now trading at $66.117. Chart: TradingView
XRP’s Stable Funding Rate Amidst Bearish Sentiment
Meanwhile, amidst the bearish sentiment, a glimmer of optimism emerges from technical analysis. Despite the high liquidation value, XRP’s funding rate has remained stable. In simpler terms, a positive funding rate implies that traders holding long positions (expecting a price increase) are currently paying a premium to those holding short positions (expecting a price decrease).
Source: Coinglass
This can be interpreted in two ways. It could suggest that some traders still believe in a potential XRP price increase, or it could indicate that short sellers are willing to pay a premium to maintain their bearish positions.
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NewsBTC’s analysis indicates that XRP’s Funding Rate currently sits at 0.030, slightly higher than the predicted rate of 0.029. Should the Funding Rate hold positive while the price continues to decline, those holding long positions might not receive the usual funding payments. This scenario could further exacerbate the bearish bias and empower aggressive sellers.
Featured image from Pexels, chart from TradingView