TL;DR:
- XRP recorded over $29.7 million in long position liquidations in a single day.
- The asset lost the $2 psychological support, dropping to a session low of $1.84.
- 96% of derivative market losses impacted traders betting on a price increase.
Leveraged investors have been the hardest hit by the current volatility phase in the digital asset market. Early Monday, XRP and crypto market liquidations reached their highest point following an aggressive correction not seen in over two months.
This scenario unfolded just as the price of XRP broke below the $2 psychological level, nearly touching $1.84. Consequently, long positions absorbed the vast majority of losses across futures markets.
However, market weakness did not only affect XRP; notably, the total sector capitalization shed at least $150 billion in just five days. As a result, investor sentiment shifted from euphoria to extreme caution in a very short period.
The Impact of Derivatives on Price Stability
Data from Coinglass reveals a massive imbalance in derivative trades during this downturn. In particular, XRP and crypto market liquidations totaled $30.86 million, with 96% belonging to bullish-biased operators.
While the price of XRP managed to stabilize near $1.96, the structural damage to the futures market remains irreversible. The speed of the decline triggered automatic sell orders and margin calls that accelerated the bearish spiral.
Interestingly, on exchanges like Binance, the long-to-short ratio remains high, indicating that many still expect a rebound. Nevertheless, XRP and crypto market liquidations suggest that selling pressure hasn’t completely dissipated yet.
In summary, the duality between the optimism of some traders and the reality of forced liquidations marks a period of uncertainty. Investors are now closely watching whether the asset can reclaim $2 to invalidate the current red trend.
