The XRP derivatives market witnessed a massive 32,474% long-short contract skew recently. The record high came after a wider market correction led to $1.26 million liquidation of long contracts. As the XRP price declined to around $2.94, traders are in the dark over whether recovery will be seen under the prevailing volatility.
Liquidation Overview
As per reports, most of the losses were due to long position liquidations and shorts amounting to a meager $3,880. One-sidedness of such nature is indicative of the fact that most of the traders had heavily leveraged their positions, which is an indicator of robust bullish sentiment. The overall crypto market has also faced heavy liquidations in excess of $564 million in the last 24 hours, and Ethereum contributed $174 million alone.
Impact on XRP’s Price
The current trends in the market have caused the price of XRP to decrease by 5.7%, a drop in accordance with the general trends in cryptocurrencies such as Bitcoin and Ethereum. The drastic price drop shows that the liquidation incidents have amplified bearish activity, exposing investors to greater losses.
Risk Management Strategies
With the present volatility in mind, the traders need to adopt healthy risk management principles. Adopt stop-loss positions and steer clear of unwarranted leverage to restrict exposure to risk during times of market turmoil. The recent experience highlights the need for traders to maintain a balanced trading style, especially in a fast-accelerating market.
XRP Future Outlook
With the XRP price remaining constant at around $2.99, market players have to re-strategize. The massive imbalance in long and short is questionable as much as whether the recovery will begin or if it will continue going down. Current market behavior catches many traders off-guard, prompting a careful evaluation of their market positions.
The XRP derivatives market is experiencing its most challenging time ever with a 32,474% long-short imbalance. This has created widespread liquidations and a steep drop in the XRP price. With the traders facing such a difficult time, sound risk management and accurate decision-making will be paramount to future success.
