Ripple (XRP) has attracted many investors due to its 500% rise in the last quarter of 2024. Due to its parabolic rise, many traders are shorting the token, hoping to profit from its decline. However, data shows that short positions worth nearly $80 million will face liquidation if the price breaks through the key resistance level.

Liquidation Risk for Ripple (XRP) Shorts: $80 Million

Ripple (XRP) is at a critical point, with the weekly and monthly charts showing consolidation behavior. Currently, the coin is trading at $2,335 with a market cap of $134 billion, showing huge user interest. This interest has brought speculative activity, as nearly $80 million in XRP short positions face liquidation if the price breaks through the $2.40 resistance level, according to CoinGlass data. This means that short positions will be forced to close and suffer losses. Of the $80 million, $8.08 million of shorts come from Bybit, $2.51 million, and $8.42 million from OKX and Binance. The rest of the short positions belong to various popular cryptocurrency exchanges.

When volatility drops, leverage can be high. Investors often open positions expecting huge gains on a breakout. As MAXPAIN analysts point out, XRP is being squeezed in a symmetrical triangle setup, waiting for a breakout rally.

Crash or Rally: What’s Next for XRP?

If the price breaks above $2.40, nearly $80 million of XRP short positions will be liquidated. Typically, when short positions are closed due to stop-loss or margin calls, the token is bought, creating buying pressure. If buyers time it themselves, it can lead to a major surge in bullish momentum, triggering a parabolic rally. But is this the case with XRP right now? Unlikely.

The four-hour RSI shows a downtrend as it struggles around the 50-MA. A break below this level could result in a rejection, giving the bearish momentum a chance to take hold. Such a development could foreshadow a price drop. This prospect seems more likely considering XRP’s lower highs since early December 2024.

If such a prospect materializes, some of the key support levels to watch out for are $2.07, $2, and even $1.9, according to cryptocurrency analysts’ predictions.

CoinGape’s previous XRP price prediction also suggested that the price would drop to $1.5 before forming a massive upward move.

After a bullish run, XRP is at a critical juncture due to the Ripple news. If Ripple breaks above the $2.40 resistance, it would signal the liquidation of $80 million worth of short positions. Eventually, this could fuel a rally that could spark an upside breakout. In this case, $2.90, $3, and $3.5 are the key resistance levels to watch.

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