Recent analysis points to a significant liquidation imbalance for XRP, reaching 5,438%, which has drawn attention from traders and analysts.
Liquidation of Long Positions
According to CoinGlass, XRP experienced liquidations totaling $7.64 million in just one hour. Of this amount, $7.50 million came from long positions, while only $140,000 was from short liquidations. This indicates that over 98% of the liquidated volume impacted traders betting on the token's continued rise.
Wider Liquidation Trend
This liquidation event did not occur in isolation. XRP experienced a liquidation imbalance of 1,178% in late March, continuing into April. The broader cryptocurrency market underwent a significant sell-off, with total liquidations exceeding $374 million across various assets over 24 hours. More than 162,000 traders were affected, with Bitcoin and Ethereum also facing significant impacts.
Assessing the Disparity
The disproportionate liquidation of long positions in XRP raises important questions about market sentiment and positioning. This imbalance suggests that many traders may have been caught with inadequate risk management or overconfidence in a continued upward trend. Following XRP's dip below $3 in early February, there was a liquidation imbalance of 1,450%, indicating that investors were caught off guard by the drop.
The state of XRP liquidations reflects both individual trading strategies and broader market trends, requiring further analysis to understand preventive measures.
