XRP is on the verge of a potential short squeeze, which could liquidate traders for $128 million following the conclusion of the Ripple vs. SEC lawsuit.
After four years, Ripple’s CEO Brad Garlinghouse stated that the U.S. regulatory agency had dropped its appeal against the firm.
The announcement, which Garlinghouse called a win on March 19, triggered a surge in XRP’s price.
XRP’s value soared to $2.55 from $2.24 during that period. But after traders anticipated an extended upswing, the price pulled back, falling by 4.3% in the last 24 hours.
Shorts Dominate XRP Market
Following XRP’s inability to hold the increase, the Long/Short ratio fell to 0.95. The Long/Short ratio acts as a barometer of investor expectations.
Values over 1 indicate that traders have more long open positions. However, when the ratio is below 1, it indicates a bearish sentiment with dominant short positions.
Coinglass data reveals that 51.28% of traders are long, anticipating an XRP price increase, while 48.72% are short, betting on a decline.
This near-even split suggests a tug-of-war between bulls and bears, making the next price movement crucial.
Despite the bearish sentiment, XRP’s price might still rebound. If that happens, traders betting on a price decrease could experience massive liquidation.
Looking at the liquidation map, Coinglass data shows that if XRP climbs higher, open short positions worth $128 million might be liquidated.
For context, a liquidation map is a visual tool that identifies areas of potential liquidation. It highlights price levels where traders are most likely to have their positions forcefully closed, based on historical price movements and open interest levels.
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Therefore, if the altcoin’s value fails to undergo another correction, it might trigger a short squeeze that could hurt traders.
XRP Price in Tight Spot
From a technical standpoint, the daily chart shows that XRP’s price is still above a key Exponential Moving Average (EMA). The indicator in question is the 20-period EMA (blue).
Typically, the trend is bearish when the 20 EMA (blue) is above the price. But despite XRP’s recent drop, it is yet to fall below this key threshold. The Awesome Oscillator (AO) has also flashed green histogram bars, indicating bullish momentum.
If this remains the same, XRP’s price might bounce to $2.47 at the 0.618 Fibonacci level. Once validated, the altcoin’s value might climb to $2.83, with a high potential of reclaiming $3.
However, if the slips below $2.22, the rally might not occur. In that scenario, XRP might decline to $1.90.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
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