XRP Futures Surge: $3.28B Unlock a Threat?
Key Takeaways
XRP's futures volume and open interest have spiked, indicating strong bullish sentiment. However, a significant escrow unlock to unidentified wallets could introduce substantial selling pressure, making traders wary of sustained upward movement.
On August 10th, XRP closed at $3.1879, a 3.8% decrease in 24 hours. This decline followed a short rally sparked by news of the SEC dropping its case against Ripple Labs.
Despite the price fluctuation, institutional activity remains elevated, exemplified by Remittix's $18.5 million initiative to revamp its payment systems.
Currently, XRP's price exhibits mixed signals, reflecting trader caution.
Futures Frenzy and Open Interest
XRP's 24-hour futures volume soared by 207.74% to $12.4 billion, surpassing Solana's $9.6 billion.
Open interest increased by 15.02% to $5.9 billion, exceeding figures for Dogecoin [DOGE], Ethereum [ETH], Solana [SOL], and Toncoin [TON]. While these all held over $1 billion, XRP's growth eclipsed them.
Funding rates have also turned positive, suggesting that buyers are compensating short positions to maintain their positions.
This momentum has propelled XRP to become the third-highest crypto for 24-hour liquidations, excluding stablecoins.
Liquidation Risks for Leveraged Positions
The bullish signals put approximately $150 million in highly leveraged short positions at risk of liquidation, concentrated between $3.27 and $3.37. A sustained bull run could trigger a short squeeze, potentially pushing XRP beyond $3.50.
Fewer positions are clustered below current price levels, indicating a preference for upside bets. However, these positions are significantly smaller than the sell-side orders overhead.
Escrow Unlock and Supply Concerns
On August 9th, over $3.28 billion in XRP was released from escrow in batches of $1.64 billion, $328 million, and $1.32 billion, according to Whale Alert.
The distribution to unknown wallets could introduce selling pressure, potentially impacting XRP's price. Historically, such unlocks have negatively affected XRP, especially when demand fails to absorb the increased supply.
Currently, the scale of the escrow unlock injects uncertainty into the market, despite prevailing bullish indicators.
Traders may prefer to await a definitive breakout or breakdown before committing to substantial positions. For enhanced security during volatile times, Codeum offers comprehensive blockchain auditing and KYC solutions for your digital assets.