Recent XRP price volatility in has led to massive liquidations for traders using leverage. TheXRP total liquidations chart from Coinglass shows massive increases in long and short positions in the last few days.
This highlights the huge risks of using high leverage when trading the cryptocurrency market. When traders use leverage, they borrow funds to boost their potential gains.
But if the price moves against their position below a certain threshold, the exchange closes their trade positions automatically. This is called liquidation.
The Coinglass chart showed the total liquidations of XRP positions in the last few days on multiple crypto exchanges. The green bars indicate liquidations of long positions (traders who predicted that the price would go up). Meanwhile, the red bars are liquidations of short positions (traders who predicted that the XRP price would go down).
The yellow line overlaid on the chart displays XRP's price over the same period. Based on the chart, it is noticeable that the green and red bars occur at about the times when the yellow line shows noticeable downward or upward movements.
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For instance, the large green increase on April 26 indicates that traders who predicted that the XRP price would increase were liquidated by a sharp drop inXRP's price. Also, the large red spikes on April 28 suggest that many traders who predicted a drop in XRP price were liquidated by the coin's sudden price surge.
The chart also revealed that the value of the liquidations in us dollars was over $1 million on many occasions. Hence, these liquidations are proof of the huge financial impact of price volatility on leveraged traders.
In addition, the high number of liquidations and their values indicate growing market volatility within this period. According to CoinMarketCapdata, XRP price currently trades at $2.29, rising by 0.78% in the last day.
The data also showed that its daily trading volume rose by 22.25% to $4.46 billion within the same period. In addition, the chart showed that XRP experienced some volatility throughout the day, with its price dropping to about $2.22 before recovering.
The price is now stable at $2.29 despite reaching a high of about $2.35 around midday.
