Liquidations Rising as XRP Price Pivots at the 50% RSI level

XRP price concluded last week on a bullish recovery trend and even achieved 5 consecutive days in the green. While this confirmed that it was ready for more upside, it also highlighted risk of liquidations as leveraged positions surged in the uptrend.

XRP experienced a sizable leverage shakedown in the first week of January, which declined as it went down. However, total liquidations have been on the rise in the last 3 days with over $8 million in long liquidations in the last 24 hours.

For reference, only $2.28 million worth of short positions were liquidated during the same period. The highest long liquidations so far this month occurred on 3 March during which over $48 million in long positions were liquidated.

The recent liquidations suggest that more could be on the way if the bears regain dominance this week. A real possibility that could set many cryptocurrencies up for another leverage shake-down.

Why XRP price could be at risk of more long liquidations this week

Although the markets have been enjoying a bit of a relief in the last few days, the underlying issues behind the crash remain unchanged. This could be the reason why the latest recovery was rather subdued and lacking aggressive appetite by the bulls.

This means a significant amount of the recent bullish volumes were buying the dip with a focus on short term gains. Traders tend to shift focus to short term profit-taking when the market leans more on the side of FUD.

XRP sentient shifted from greed to neutral, it aligns with the short term focus. Meanwhile, funding rates were mainly negative in the second week of March but shifted to positive funding rates towards the end of last week.

The shift in funding rates represented more demand in the derivatives segment. Options open interest was up 65.13%, while options volumes surged by 133% in the last 24 hours.

Positive spot flows were observed between 11 and 15 March averaging around $16 million per day. Spot flows shifted back to negative in the last 24 hours during which it recorded $33 million worth of outflows.

XRP price upside limited by profit-taking

The negative spot flows in the last 24 hours highlighted short-term profit-taking. This sell pressure kicked off after its relative strength index (RSI) interacted with its mid-level, acting as a profit-taking zone.

There were also reports that whales acquired 150 million XRP on Saturday and Sunday. This may have been a whale inducement moment to attract more buying and hence more liquidity for short term traders.

A leverage shake-down is bound to happen as excitement returns to the market. Meanwhile, upcoming FOMC data this week could set the pace this week, which could then determine if the markets will extend their March recovery or revert back down.