XRP Price Rebounds 40% Amid Liquidation of Short Positions

December 25, 2020 | AtoZ Markets – During the day, the market value of XRP rose 52%, after which it stabilized 40% above the previous day's value. The spike was caused by the liquidation of margin positions in the futures market.

XRP price recovers to $0.37

In four hours, the XRP price climbed from $0.2536 to $0.3720. After a short correction, the token returned to  $0.3561.

Bitstamp Hourly XRP/USD Chart by TradingView.

XRP faced contract liquidation on December 23. During the general correction of the cryptocurrency market, the price of the token fell more than Bitcoin and Ethereum.

The fall in XRP prices was aggravated by fundamental factors - the day before, the US Securities and Exchange Commission (SEC) filed a lawsuit against Ripple and two of its leaders.

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The subsequent sell-off brought the XRP price down to $ 0.2138. The sharp drop resulted in a significant imbalance in favor of short orders and on December 25th there was a short squeeze (short squeeze).

Data: Bybt.

XRP short positions worth $73.5 million were liquidated in 24 hours.

Shortly before this, some analysts pointed to the high likelihood of a short squeeze.

A short squeeze is a situation where the price of an asset drops or rises sharply and traders using leverage are unable to cover losses for margin positions. Due to the massive closing of positions, the price bounces in the opposite direction.

We will remind, recently the head of Pantera Capital Dan Morehead was optimistic about the prospects for XRP and Ethereum.

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