XRP prices have been trending sideways for the past week, and this consolidation is a cause for concern for investors as it is part of a bearish continuation pattern. Despite the decline, XRP is still up 3.8% over the past seven days, slightly recovering from the sharp decline the asset experienced in early October.
Since November 2022, the cryptocurrency market has experienced several significant liquidation events. In March 2023, a $500 million liquidation led to a sharp drop in prices, and in July 2023, a further $700 million liquidation caused further uncertainty in the market. Given that these liquidation events will occur in 2023 and 2024, is another liquidation event in store for cryptocurrencies?
Crypto analyst Cole Garner predicts a bull market is coming soon as common assumptions emerge. According to Garner, when on-chain liquidity starts to tighten, it signals a capitulation is near, which is a prerequisite for a full-blown bull market.
How crypto market sentiment and historical data affect XRP price
The crypto market has experienced multiple liquidation events over the past two years, with significant declines occurring in various months. In November 2022, a crash in liquidation events wiped out $300 million in crypto market capitalization, dropping 27% from $1.35 trillion to $735 billion in two days.
Similarly, more recently, the August 5th crash saw more than $1 billion in liquidations, and on September 6th, $295 million was taken out of the market. These crashes resulted in 30% and 11% declines, respectively, devastating altcoins.
Furthermore, the 2024 bull cycle is similar to the 2016 bull market, which had a 35% market crash in August, which also marked the beginning of the final stage of the bull market. This may be what Garner calls a “liquidity squeeze.” That could cause a widespread market decline, impacting the price of XRP and other cryptocurrencies.
These events demonstrate the market's vulnerability to large-scale liquidations and the potential for further price declines should this occur. History is always a good predictor of the future, and if the two cycles continue to align, the August 5th crash should be the last big crash until Q1 2025.
XRP price analysis
If another $1 billion liquidation event occurs, XRP price could be significantly affected. Based on historical data, XRP has been shown to be sensitive to market-wide declines, often experiencing sharp declines in response to large liquidation events.
For example, in the last $1 billion liquidation, Ripple price fell by about 34% from $0.67 to $0.44.
Considering this historical trend, the liquidation of another $1 billion could cause an even more significant price decline, pushing XRP price below $0.34.
conclusion
If such a liquidation event occurs, it will provide the following opportunities: Buy some top altcoins XRP is also available at a discounted price. In a bull market following a liquidity crunch, crypto prices could rise further if this cycle replicates the 2016 market.
Frequently asked questions (FAQ)
Since November 2022, several significant liquidation events have impacted the market. A $500 million liquidation in March 2023 and a $700 million liquidation in July 2023 caused the market to decline significantly. Most recently, a $1 billion liquidation in August 2024 caused the market to fall by 30%, causing XRP and other altcoins to suffer sharp declines.
During past liquidation events, XRP experienced significant price declines. For example, in the $1 billion liquidation in August 2024, XRP fell 34% from $0.67 to $0.44.
Based on historical trends, if another $1 billion is liquidated, XRP could fall by about 34%, with the price dropping to about $0.34 or less.
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Evans Karanja
Evans Karanja is a crypto analyst and journalist with a deep focus on blockchain technology, cryptocurrencies, and the video game industry. His extensive experience includes working with a variety of startups to provide insightful, high-quality analysis that resonates with target audiences. As an avid crypto trader and investor, Evans is passionate about blockchain's transformative potential across a variety of sectors. Outside of his professional work, he enjoys playing video games and exploring beautiful waterfalls.
Disclaimer: The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.
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