Something remarkable is happening with XRP. While the price fluctuates around $1.37, traders are betting en masse on further decline. At the same time, major investors are withdrawing hundreds of millions of dollars in XRP from exchanges. These two signals seem to contradict each other, but together they can be the harbinger of a significant price movement.
Simply put: the market is betting on a decline
On crypto exchanges you can not only buy crypto, but also bet on price movements. Anyone who thinks that XRP will fall opens a so-called short position. Anyone who thinks the price will rise opens a long.
Currently, short positions in XRP are 163% larger than long positions. This means that more than 2.5 times as much money was invested on a decline than on an increase. Above the current price there is $110 million in short leverage, more than half of which is concentrated around $1.39.
In short, the majority of traders expect XRP to fall even further.
Big investors do exactly the opposite
While traders bet on a decline, major investors are withdrawing their XRP from exchanges. In recent days, $738 million worth of XRP has flowed from trading platforms to private wallets.
Why is that important? Anyone who leaves their coins on an exchange can sell them quickly. Anyone who moves them to their own wallet usually does not plan to sell in the short term. It is a sign that major players want to hold on to their XRP.
Fewer coins on exchanges also means less supply. And less supply with the same demand can drive up the price.
Why that combination can be explosive
This is where things get interesting. Suppose the price rises unexpectedly, for example due to good news about the Iran conflict or a broader crypto rally. Then all those short positions come under pressure.
Traders who are short and make a loss will at some point be automatically removed from their position by the exchange. That’s called a liquidation. To close that position, the exchange must buy back XRP. This creates additional buying pressure, causing the price to rise even faster, causing more shorts to be liquidated.
That snowball effect is called a short squeeze. And with 163% more shorts than longs and less and less XRP available on exchanges, the ingredients for this are on the table.
No guarantee, but the skew is extreme
A short squeeze is not a certainty. If the price falls instead of rising, the short holders actually benefit. But the current situation is exceptionally skewed: the majority is betting on a decline while large wallets are hoarding.
It’s a pattern we’ve seen before with XRP. In similar situations, there was often a sharp price movement of 15 to 25% in a few days. The trigger could be anything: a breakthrough in the Iran conflict, a Bitcoin rally above $72,000, or simply reaching a liquidation level.
XRP is currently trading between 1.38. Above $1.44, things really start to get exciting for short holders.
Source: https://newsbit.nl/xrp-iedereen-verwacht-een-daling-maar-de-data-wijst-juist-op-een-prijsstijging/
