On November 8, the market forcibly closed long positions on XRP worth almost $39 million. Short positions, meanwhile, closed for only $366 thousand. The gap is roughly a hundredfold.
A long position is a bet on the price rising, a short one is a bet on it falling. Leverage allows you to trade a sum larger than your deposit. The higher the leverage, the smaller the move against the trader that wipes out the margin.
This matters to the trader for one reason. When leverage is piled up on one side, the decline accelerates itself and hits even those who guessed the direction correctly.
What did the numbers show?
According to the CoinGlass service, almost the entire volume of liquidations came from long trades. CoinGlass counts liquidations on crypto exchanges.
A liquidation is the forced closure of a leveraged position when the loss eats up the margin: the exchange sells the asset on the trader's behalf without asking. Such sales push the price even lower and trigger the next batch of closures.
- five days in a row - XRP has been falling without a break
- about 14% - the coin's losses over this time
- about $1.09 - the current price
- $1.26 - the broken level where buyers held the price all of October
- $1.34 - the attempted recovery on November 4, which ran out of steam within a few hours
Why hasn't the pressure gone away?
The Relative Strength Index has dropped to about 26 - a three-month low. RSI shows how fast and how strong the move has been. This points to harsh selling pressure and to oversold conditions, in which a brief bounce is possible even within a decline.
The main risk remains in the futures market. Open interest on XRP futures is about $2.51 billion. Open interest is the sum of all open contracts.
Key point: the November wave took out only part of the leveraged positions; the rest are still hanging.
Which levels to watch?
- The $1 area. The nearest support, which buyers defended in August.
- $0.86. A daily close below $1 opens the way here according to the technical pattern, which is another 21% down.
- $1.14. A return above this is considered the first sign that sellers are weakening.
- $1.26. Above this mark is confirmation of a reversal.
The dates of macro data that move crypto are collected in the economic calendar. To trade such moves without your own leverage, choosing a challenge to match the market helps.
Have you seen longs on XRP get wiped out?
Leverage works both ways. A hundred traders caught the move correctly but got knocked out by margin before the price reached their target. Usually there's one calculation behind this: a small account is juiced with leverage so the profit figure looks decent. In prop trading, the company provides the notional for the trade: you pay for the selection, trade within its loss limits, and split the result under the contract. On a decline five days in a row, it's sensible to understand this mechanic before you reach for leverage again.