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XRP to Experience Liquidity Black Hole Above $5
According to popular cryptocurrency analyst Steph, XRP may start to face significant short-selling activity above $5. He tweeted “#XRP LIQUIDITY MAP SHOWS A BLACK HOLE ABOVE $5. BREAKOUT COULD GET VIOLENT” and posted this liquidity graph on X (formerly Twitter) in support of his argument:
The graph clearly shows a drastic drop in liquidity for the major digital asset once it overcomes the long-term price target of $5. This clearly correlates to the black hole concept in asset liquidity and could spell significant trouble for the digital currency if it isn’t addressed on time.
What is a Liquidity Black Hole?
A liquidity black hole is a dreaded market phenomenon in which liquidity dries up suddenly, causing short sellers and spot traders to engage in a constant loop of selling, causing violent price swings and affecting the stability of the asset.
This is very similar in practice to the concept of a bank run, in which depositors rush to financial institutions and make large withdrawals, resulting in an immediate liquidity crunch. It is a situation that a major cryptocurrency like XRP needs to avoid at all costs, or traders will pay a significant price.
 
Is this Anticipated Liquidity Crisis Manageable?
Ripple, the parent company of the XRP project, may be able to improve liquidity as it still controls a large portion of the cryptocurrency’s supply as part of its centralized infrastructure. However, any such liquidity management exercise will be made complex because of its escrow system.
In 2017, Ripple placed 55 billion of its XRP holdings into a cryptographically secured escrow. This system is designed to release a maximum of 1 billion XRP each month and not more. That is around $5 billion worth of XRP that it can use to manage liquidity on a monthly basis.
It remains to be seen whether this control over market liquidity will be able to save XRP through a soft landing tactic so that it can perform at an optimum level near the culmination of the 2025 bull market.
Source: https://zycrypto.com/liquidity-black-hole-awaits-ripples-xrp-above-5-as-analyst-predicts-strong-breakout-scenario/