The XRP Price Volatility and the Potential for a Short Squeeze
The XRP price has been highly volatile in the first two weeks of October, which is a departure from the trend of previous months. This volatility is expected to continue due to a critical metric suggesting the possibility of a “short squeeze,” a move that would drain liquidity from both long and short positions.
Currently, the XRP price is trading at $0.48, experiencing a 2% loss in the past 24 hours. Over the previous seven days, it recorded a 9% loss, making it the worst-performing cryptocurrency in the top 10 by market cap, closely followed by Solana (SOL).
XRP Price Surge Triggered by SEC Case Outcome
In October, the crypto market saw an increase in volatility after months of Bitcoin and Ethereum trading sideways. The catalyst for this volatility was the US Securities and Exchange Commission (SEC) losing its case against Ripple, a payment company associated with XRP.
A US Judge ruled in favor of Ripple, stating that XRP does not fall under securities laws in the country. This ruling led to fresh yearly highs for XRP, but the cryptocurrency has since lost some momentum. Uncertainty remains high in the crypto market, and any individual bull run is likely to lose steam, as seen with XRP’s recent price action.
Potential Short Squeeze and Downside Price Action
Despite the current fragile state of affairs, new data indicates an impending aggressive move. An anonymous analyst shared a chart showing a spike in Bitcoin Open Interest, suggesting that such spikes often lead to sudden price movements in Bitcoin, XRP, and other cryptocurrencies.
While this spike in volatility could bring XRP back to critical support levels in the short term, it is more likely to trigger a Short Squeeze. This sudden volatility spike would be used by prominent market participants to extract liquidity from both long and short positions.
On higher timeframes, the broader crypto market and major cryptocurrencies could hinder any upside potential for XRP. Another analyst suggests that the sector is poised for a significant downside move, citing the upcoming Bitcoin Halving event as a contributing factor. If Bitcoin follows historical patterns and retraces back to around $20,000, XRP may return to its pre-SEC victory levels.
Crypto Bulls Eyeing Accumulation Opportunity
Despite the potential downside price action, this could present an ideal opportunity for bulls to accumulate before an overall bull run takes hold of the crypto market. Historical data also indicates that XRP performs well in the second half of the year, offering a 30% return on investment (ROI) during this period.
It’s worth noting that the cover image is from Unsplash and the chart is from Tradingview.
Hot Take: Uncertain Times Ahead for XRP
The XRP price has been on a rollercoaster ride in October, experiencing heightened volatility compared to previous months. While the recent victory for Ripple against the SEC initially propelled XRP to new highs, it has since faced downward pressure. The possibility of a short squeeze adds to the uncertainty surrounding XRP’s future price movements.
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