Ripple’s XRP token experienced a significant drop of over 15% in the past 24 hours, contributing to its poor performance. However, the crash of the XRP/USDT perpetual contract on Bybit intensified the decline, with a staggering 45% loss during early trading hours.
A prominent Bybit user known as “@Defisquared” has put forward a possible explanation for the sudden plunge in the XRP/USDT pair’s value on the exchange. They suggest that a substantial price disparity between XRP/USDT and XRP/USD perpetual contracts occurred due to extensive liquidations of XRP. These liquidations caused algorithmic market makers to deplete their spot XRP reserves required for the coin-margin contract.
The massive XRP liquidations coincided with the market’s reaction to Ripple’s opposition filing against the US Securities and Exchange Commission’s (SEC) request to appeal a previous ruling. This ruling had determined that XRP sold on secondary markets did not qualify as securities.
Furthermore, the broader market downturn, which pushed Bitcoin’s price down to the $25,000 level, also had an impact on XRP’s price. Nervous traders chose to liquidate more than $50 million in leveraged positions, exacerbating the downward pressure on XRP.
It is important to note that the information provided above is based on analysis and insights from market participants and does not constitute financial advice. Investors and traders should conduct their own research and exercise caution when making investment decisions.
In conclusion, the significant drop in XRP’s price and the crash of the XRP/USDT perpetual contract on Bybit can be attributed to various factors, including liquidations, market reactions to legal developments, and broader market conditions. As always, it is essential for market participants to stay informed and make informed decisions based on their own analysis.