XRP experienced a sharp sell-off during Labor Day, with its price quickly falling to $1.38 and causing an avalanche of forced margin calls. CoinGlass recorded an exceptionally rare market anomaly, as XRP’s hourly liquidation imbalance briefly soared past 10,535%. The number of forcibly closed long positions vastly exceeded short position closures, more than a hundredfold, highlighting the intensity of the event.
XRP rebounds after forced liquidations
Following the sudden plunge, XRP managed to recover from its local bottom and climbed back to $1.3892. On the lower time frames, a reversal pattern began to form, signaling renewed optimism among short-term traders.
The abrupt drop from $1.4150, XRP’s daily high, activated stop-loss orders for highly leveraged traders. While the spotlight remained on significant losses in Bitcoin and Solana, which registered $10.72 million and $4.55 million in daily liquidations respectively, XRP encountered a swift technical disruption in its order book.
Technical pressure and liquidation zones
The main driver behind the intense long squeeze stemmed from crowded long positions near XRP’s critical “Liquidation Max Pain” zone. On the monthly chart, XRP’s price approached the Short Max Pain level at $1.4368, an area where sellers could see the most losses. Many traders had accumulated long positions, hoping for a decisive break above this threshold, which created a dense concentration of orders highly sensitive to volatility.
Currently, XRP trades only 3.94% below the short-side pain point, with $9.20 million in short positions at risk of liquidation. The Long Max Pain level, sitting at $0.9837, is more than 28.83% below the prevailing price, exposing $24.29 million in potential long-side liquidations. This distribution suggests the turmoil was likely a localized, technical shakeout rather than a broader market reversal.
The price is now only 3.94% below the short-side pain level, where $9.20 million in bearish positions could be liquidated. Meanwhile, the long-side level — Long Max Pain at $0.9837 — remains more than 28.83% below the current price, with $24.29 million in potential liquidations. This confirms the local nature of the current shakeout.
Exchanges show mixed reactions as volumes rise
Crypto exchanges responded differently to the volatility. KuCoin and Gate experienced net capital outflows, with open interest declining by 5.16% and 4.07%, respectively. In contrast, MEXC and Bybit witnessed heightened trading activity, becoming centers of speculative interest.
On MEXC, daily trading volume surged 118.32% as traders moved rapidly to buy the dip amid the forced selling. This impulse buying helped restore XRP’s price to $1.3892. Technical indicators, previously deeply oversold, bounced back and flashed a local bullish signal.
The nearest immediate hurdle for bulls stands at the resistance level of $1.4010. Surpassing this area could signal the definitive end of the evening’s bearish momentum and pave the way for broader recovery.
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