Following Bitcoin's climb past $84,000, XRP experienced a 7.57% price jump in one day. this rally was fueled by a massive short squeeze that forced the liquidation of hundreds of millions in losing bets.
A $313 million liquidation event triggered by Bitcoin
The sudden price movement was a direct result of Bitcoin's surge to $84,702, which pushed the market to levels not seen in nearly eight months . As Bitcoin climbed, many traders holding short positions found themselves unable to maintain their margins. According to the report, CoinGlass observed that in the single hour Bitcoin crossed the $84,000 mark, approximately $313 million in positions were liquidated, with shorts accounting for 96% of that volume.
This forced buying pressure extended throughout the day, with total liquidations reaching roughly $710 million over a 24-hour period. In these instances, exchanges are forced to buy back coins at market prices to cover losing positions, a process that creates a feedback loop of rising prices. While the broader market saw gains—including a 6.6% climb for Solana and a 5.4% rise for Ethereum—XRP's movement was uniquely tied to this aggressive unwinding of short bets.
How XRP's negative funding since September 11 created a powder keg
XRP was particularly susceptible to this volatility because it had been lagging behind the broader cryptocurrency market for much of the month. The report notes that XRP's funding rate had been negative since September 11, a technical signal that traders were heavily betting against the asset and paying a premium to maintain those short positions. This created a crowded trade that was highly vulnerable to any sudden upward movement in Bitcoin.
Despite the recent 7.57% spike, the asset's long-term performance remains under pressure. XRP is currently down approximately 20% for the year and has seen a 1.5% decline over the last 30 days. While the token has successfully climbed back above its 200-day moving average of $1.35 and its 20-day average of $1.32, the rally is viewed by many as a technical correction rather than a fundamental shift in sentiment.
Bitcoin's sub-59% dominance and the altcoin rotation
This short squeeze occurred against the backdrop of a shifting market structure where Bitcoin's dominance has slipped to a one-month low of under 59%. This decline in Bitcoin's market share has prompted a rotation of capital into various altcoins. For example, assets such as UNI, NEAR, and ARB recently saw surges of nearly 30% in a 24-hour window.
XRP's recent price action mirrored this trend of capital moving into secondary assets. however, the sustainability of this rotation remains a point of debate among analysts. While the technical setup shows a potential "golden cross"—where the 50-day moving average approaches the 200-day average—the lack of organic buying pressure following the liquidations suggests the market may soon enter a period of sideways trading.
The October 1 Ripple escrow release and ETF outflows
Several looming factors raise questions about whether XRP can maintain its current trajectory. First, Ripple is scheduled to release one billion XRP from its escrow on October 1, an event that typically introduces selling pressure into the market. second, while Bitcoin ETFs continue to attract significant capital, XRP exchange-traded funds have recently seen outflows, including a recent loss of about $5 million.
Traders are now looking to specific price levels to determine if the squeeze has exhausted itself. If XRP can close above the $1.50 resistance level, it may find a path toward $1.70. However, if the price falls below the $1.41 support level, it could signal that the buying momentum from the short squeeze has officially ended. Whether regular buyers will step in to replace the liquidation-driven demand remains the primary unanswered question for the coming week.
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