In a significant turn of events, a court ruling favouring Ripple Labs has triggered a massive liquidation of crypto shorts within the past 12 hours. The ruling delivered a summary judgment, declaring that XRP, the token associated with Ripple, is not classified as a security.
Here’s what unfolded
Over the span of 24 hours, a staggering 80,950 traders witnessed the liquidation of their positions, resulting in a combined liquidation value of $285.50 million. Remarkably, 75% of these liquidations involved short positions, according to data from CoinGlass.
Within a mere 12-hour timeframe, Bitcoin (CRYPTO: BTC) shorts worth $50.11 million and Ethereum (CRYPTO: ETH) shorts amounting to $38.11 million were liquidated.
Among these liquidations, the most significant single order occurred on Bitmex, involving XRP tokens valued at $2.82 million. Notably, the total liquidation value of XRP in the past 12 hours alone reached $58.23 million, with $32.96 million accounting for the liquidation of short positions.
Short liquidation, a short squeeze, poses a significant risk in leveraged cryptocurrency trading. It transpires when investors or traders fail to meet the margin requirements for their positions, typically due to a sudden surge in the price of the traded asset.
Why does it matter?
Following the court ruling, on-chain data provider Santiment reported a substantial surge in whale activity on the XRP network. Whale transactions, denoting large-scale transfers by major cryptocurrency holders, have soared to their highest levels in 2023 by a considerable margin. Over the past 24 hours, the XRP network recorded 637 whale transactions, each amounting to $100,000 or more.
To fully grasp the implications of these transactions, Santiment underscores the importance of considering the context. When whales and sharks, referring to significant cryptocurrency holders, increase their holdings during a price upswing, it suggests that the upward momentum may persist and lead to positive market outcomes.
At the time of writing, XRP was trading at $0.69, reflecting a 62% surge in the last 24 hours, as per data from Coinmarketcap.
Disclaimer: The information provided in this post is for general informational purposes only and should not be considered professional or financial advice.