XRP Liquidation Signals Negative Crypto Funding

What to Know:

• XRP experienced significant long liquidations due to a sudden market pullback.
• Broader market sentiment was affected by renewed U.S.-EU trade tensions stemming from potential tariffs.
• The liquidations highlight XRP’s vulnerability to macro events, despite positive ETF inflows.

XRP derivatives traders faced substantial losses as a sharp crypto market pullback triggered over $5 million in long liquidations on January 19. The selloff was attributed to renewed U.S.-EU trade tensions, sparked by potential tariffs. This event underscores the impact of macroeconomic factors on the cryptocurrency market, particularly for assets like XRP that see active leveraged trading.

XRP Liquidations Follow Tariff Headlines

Data indicated that XRP saw one of its largest single-day long liquidation events this month. The catalyst was a report that European nations were considering tariffs on U.S. goods in response to President Trump’s threats toward NATO allies over Greenland. The article stated that Bitcoin dropped, and the broader crypto market experienced nearly $500 million in leveraged long positions being wiped out in roughly 60 minutes.

XRP Price Action

At the time of the selloff, XRP was trading around $2.00, reflecting a 5% decrease over the prior 24 hours. XRP has lost approximately 5% over the past week and nearly 8% over the past 14 days. Over the past month, XRP remains modestly higher, up just over 2%, while its one-year gain stands near 39%.

Technical Analysis and Market Structure

The recent downturn pushed XRP towards the lower boundary of its weekly trading range, situated between $1.95 and $2.18, with sellers actively defending the $2.10 to $2.15 range. Technical analysts had previously noted weakening momentum, with XRP trading within a descending channel. Buyers had shown interest near $2.00 but struggled to overcome higher resistance levels. The January 18 selloff reinforced this caution, highlighting how macro headlines can override crypto-specific positive developments.

Impact of ETF Inflows

Despite the price drop, XRP spot exchange-traded funds (ETFs) have shown net inflows of around $57 million last week, reversing earlier outflows. This suggests continued institutional interest in XRP. However, the positive ETF demand has not been sufficient to insulate XRP from macro-driven risk-off events, indicating that broader market sentiment continues to play a significant role in XRP’s price dynamics.

Broader Market Context

The liquidation event and subsequent price action highlight the interconnectedness of the cryptocurrency market with traditional financial markets. Macroeconomic events, such as trade tensions and tariff threats, can quickly impact crypto assets, particularly those with high levels of leverage. This underscores the need for traders and investors to remain vigilant about global economic developments and their potential effects on digital asset portfolios.

Conclusion

The recent XRP liquidations serve as a reminder of the inherent risks associated with leveraged trading in the cryptocurrency market. While positive developments, such as ETF inflows, can provide support, assets like XRP remain susceptible to broader macroeconomic factors. Investors should carefully consider these risks and maintain a balanced approach to managing their crypto holdings.

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Source: Original article