Ripple (XRP) has attracted many investors due to its 500% rally in the last quarter of 2024. Due to its parabolic rally, many traders are shorting the token, hoping to profit from its downfall. However, data shows that short positions worth nearly $80 million will face liquidation if the price overcomes a critical resistance level.

Ripple (XRP) Shorts’ Liquidation Risk: $80M on the Line

Ripple (XRP) is at a crucial point, with the weekly and monthly charts presenting consolidation behavior. Presently, the token trades at $2.335 with $134B in market capitalization, showing massive user interest. CoinGlass data shows that with such interest comes heightened speculation, as nearly $80 million XRP short positions will face liquidation if the price overcomes the $2.40 resistance level. This means that short positions will be forcibly closed at a loss. Out of the $80 million, $8.08 million short sellers are from Bybit, $2.51 million, and $8.42 million are from OKX and Binance, respectively. The rest of the short positions belong to various popular cryptocurrency exchanges.

High leverage is likely when volatility drops. Investors are often open positions with the expectation of massive gains on the breakout. As noted by MAXPAIN analyst, XRP is getting squeezed in a symmetrical triangle setup, awaiting a breakout rally.

$XRP TA

– price squeezed in symmetrical triangle = preapring for breakout

– Bollinger Band Width (BBW) = Approaching local low = breakout imminent

– but symmetrical triangle = no bias = could breakout in any direction

– exaggerate bullish divergence = breakout likely bullish pic.twitter.com/g4uGjS5pLB

— MAXPAIN (@Mangyek0) January 10, 2025

A Crash or Rally: What’s Next for XRP?

If the price crosses above $2.40, it would liquidate nearly $80 million in XRP shorts. Typically, when short positions are closed either due to stop loss or margin call, the tokens are bought, creating buying pressure. If buyers time themselves, it could lead to a massive spike in bullish momentum that triggers a parabolic rally. But is that the case for XRP now? Unlikely.

The four-hour RSI shows a downtrend as it struggles around the 50 mean level. A move above this level could result in a rejection, giving bearish momentum a chance to take over. Such a development could indicate a drop in the price. This outlook seems more likely considering the lower highs XRP has produced since the start of December 2024.

If such an outlook unfolds, some key support levels to watch are $2.07, $2, and even $1.9, per crypto analysts’ predictions.

A previous CoinGape XRP price prediction also hints at the price crash to $1.5 before forming a massive rally.

After a bullish trajectory, XRP comes at a critical point with the Ripple news. This predicts the liquidation of the $80M worth of short positions if Ripple overcomes the $2.40 resistance level. Eventually, this could fuel a rally, triggering a breakout to the upside. In such a case, $2.90, $3, and $3.5 are key resistance levels to watch.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.