$420M in leveraged long traders liquidated as XRP reaches $1.96
As XRP reaches its highest level since January 2018, the robust increase in the price shows that investors are not really worried about the ongoing SEC "unregistered securities offering" dispute.
After a huge dump earlier this year, XRP holders would not ask for anything better now as the cryptocurrency rose almost 800% reaching just above a $2 level today on April 14.
However, after 6 hours of reaching $1.96, XRP price crashed by more than 20%. In an interview, DCG Group CEO Barry Silbert said it would be risky for exchanges and companies in the United States to relist XRP ahead of receiving the SEC's blessing. These statements may have affected the investors to liquidate $420 million on derivatives exchanges today.
As the context of the recent rise, pinpointing a single reason for the price correction will likely be inaccurate. Nevertheless, the impressive $420 million long liquidations past 24-hours exceed those of Feb. 1 when XRP price crashed by 46% in two hours.
A logical reason behind this staggering liquidation could be excessive leverage used by buyers. To confirm such a thesis, one must analyze the perpetual contracts funding rate. To balance their risks, exchanges will charge either longs or shorts depending on how much leverage each side is demanding.
Blaming the liquidations exclusively on leverage seems a bit extreme, although it has certainly played its part in amplifying today's correction.