Liquidations for XRP futures contracts rose sharply at the end of the year as bullish signals in November followed by bearish news in December that boosted the price of chips.
More than $ 1.5 billion worth of XRP futures contracts have been liquidated since early November, according to analyst supplier Bybt. Barely $ 700 million in liquidated futures contracts were recorded between March and October.
In November, the price of XRP jumped over 220% to two-year highs below just under $ 0.80 as traders predicted a scheduled token airdrop event by Flare Network for all XRP owners. In short, anyone holding an XRP would automatically get a share of the new Spark token, encouraging new customers to accumulate XRP.
Adding fuel for the craze, leading U.S.-based cryptocurrency exchange Coinbase has announced plans to support the upcoming airport, according to a previous CoinDes report.
“XRP experienced mass price movements in November due to the interest of retail investors for the Spark aircraft scheduled for December 12, 2020,” said Florent Moulin, a cryptocurrency researcher at data provider Messari. “In the market, experienced investors have also accumulated XRP in anticipation of the bull bull market.”
XRP’s acute bullish trend quickly ended when the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple for allegedly violating federal securities laws in selling cryptocurrencies to retail consumers, raising $ 1.3 billion over a seven-year period .
Traders reacted negatively to the news as XRP has currently started reclaiming large chunks of profits from the previous month. Institutional investors followed suit with Bitwise cryptocurrency money manager by liquidating the entire XRP position of its index and prominent brokerage houses like OSL informing clients that they stopped all XRP trading.
Both events – airdrop and lawsuit – pushed XRP price volatility to its highest level since July 2018, according to Coin Metrics, with more than a 130% increase in volatility since early November.
The sharp drop in prices for XRP is likely due to a combination of factors, Moulin told CoinDesk. But the most significant is probably the SEC’s lawsuit against Ripple.
Also noteworthy is the increased sales founded by Ripple co-founder Jed McCaleb, who sold XRP worth over $ 120 million in December, more than three times more than in previous months.
Some of the downward price declines in December were also caused by XRP owners who were selling after receiving tokens from an airdrop event, Moulin said.
Whatever the reason, since news broke of the SEC lawsuit, the XRP has fallen by more than 60% and fallen below its pre-air rage levels in early November, hitting $ 0.21 on Wednesday.
And while the price is still falling and over $ 350 million in futures contracts were liquidated two days before Christmas Eve, XRP investors are left to face a not-so-happy holiday season.