Ripple (XRP) price slipped from a daily high of $2.24 to a daily low of $2.13 on May 1, as traders reacted to news around the failed acquisition of USDC stablecoin issuer Circle. This dip triggered a liquidation imbalance, as some traders with open long positions were forcefully closed, causing a surge in sell-side pressure. However, after this crash cleared key liquidation levels below the price, Ripple seems ready for a bullish recovery to $3.
XRP Price in Focus Amid Liquidation Imbalance
XRP value today stands at $2.23, as data from CoinMarketCap reveals that trading volumes have soared by 19% to $3.42 billion. After recovering above the $2.20 support level, traders are closely watching whether this altcoin could surge past $3.
This recent drop in XRP price caused a 1,000% liquidation imbalance according to analyst ALT4F. Data from Coinglass shows that in the last 24 hours, more than $14 million long positions on XRP were liquidated, marking the highest level in three weeks, while short liquidations came in at around $1.5 million.
Analyst ALT4F noted that the high number of long liquidations indicates that more traders are opening long positions as they anticipate the XRP price may rally. While this long bias suggests that the bullish sentiment towards Ripple is strong, it may also have a negative impact.
Per this analysis, if Ripple plunges below $2.15 under the current market conditions where leverage is notably high, it could trigger a cascade of long liquidations that will push the price further down, and possibly cause a breach of the $2 support level.
XRP Liquidation Heatmap Hints Rally to $3 is Likely
However, if XRP breaks out from its tight trading range and pushes above $2.30, then it is likely to avert the risk posed by long traders and rally past $3. Moreover, the liquidation heatmap shows that there is a hot liquidation zone above the price at $2.34, and if XRP can get to this level, the ensuing short liquidations may spark a sustained rally towards $3.
As this heatmap shows, there is a cluster of liquidation levels above price, and if Ripple can rally to clear these levels, the wiped short positions could spark a surge in buying pressure and make a bullish case for the altcoin.
Ripple Technical Analysis
The XRP one-day price chart shows that the altcoin is at a pivotal point, which may explain why it has been consolidating within a tight range as traders hold positions to await a breakout.
XRP is testing resistance from the upper descending trendline of a parallel channel, and if it is successful in breaking out above $2.33, it might extend the rally to $2.61, and this will clear the way for a run up to $3.
The RSI supports this bullish thesis as it rises with higher highs, with the reading of 55 showing that the momentum is bullish. Meanwhile, the on-balance volume is still at range highs, an indication of a strong upward trend.
These technical indicators and the pending breakout support indicate that an XRP price breakout to $3 is next, and if this plays out, traders should await new highs. However, short-term fluctuations may impact liquidations, and considering the high leverage towards Ripple, a slight dip could spark a cascade of long liquidations and push the altcoin lower.
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