XRP price dropped by 20% shortly after making a 2021 high at $1.96, but have the altcoin’s bullish fundamentals changed?
XRP holders couldn’t have asked for a better year as the digital money rallied for almost 800% and flirted with a $2 level in the early hours of April 14.
XRP price stumbled by more than 20% 6 hours after reaching US$1.96.
During an interview by Coindesk, DCG Group CEO Barry Silbert said it would be risky for exchanges and companies in the United States to relist XRP ahead of receiving the SEC’s blessing.
These remarks may have contributed to the unprecedented $420 million long liquidations on derivatives exchanges today.
Over the past weeks, XRP catalyst’s rally have been victories in Ripple’s legal battles. Ripple’s legal counsel were granted access to internal SEC discussions regarding cryptocurrencies.
Moreover, a court denied the disclosure of two Ripple executives’ financial records, including CEO Brad Garlinghouse.
Considering the recent rally, the main reason for the price correction will likely be in the short term. Nevertheless, its US$420M long liquidations past 24-hours exceeded those of Feb. 1 when XRP price crashed by 46% in two hours.
Crash’s probable cause
The only logical reason behind this staggering liquidation is excessive leverage that is used by the buyers. One must analyze the perpetual contracts funding rate in order for it to be confirmed.
Balancing their risks, exchanges will be charging either longs or shorts depending on how much leverage each side is demanding.
The liquidation in terms of leverage will definitely be the reason for this kind of correction in XRP..
Cascading liquidations will always take place in volatile markets. Thus investors should focus on how long it takes until the price recovers from it.
Its correction depends on how many bids were previously stacked at exchange order books and is not directly related to investors’ bullish or bearish sentiment.
Finally, that fundamentally 10% or 20% intraday drop should not be interpreted differently.
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