XRP Takes the Brunt of Crypto Selloff
The cryptocurrency market experienced a significant jolt on Thursday, with the total market shedding a staggering $100 billion overnight. Leading the losses among the top 10 tokens was XRP, which saw its price plunge over 10% within 24 hours, briefly dipping below the psychologically important $3 threshold. This sharp decline caught more than 315,000 traders off guard, resulting in nearly $1 billion in liquidated positions across the market. While the pain was widespread, Ethereum longs bore the biggest hit in the derivatives market, according to CoinGlass data.
Despite giving back a considerable portion of its recent gains, XRP still maintains an impressive approximately 40% increase over the past month, indicating underlying strength despite the current volatility. This sudden downturn highlights the inherent risks of leveraged trading and the rapid shifts in sentiment that can characterise the cryptocurrency landscape. The market’s swift reaction to what appears to be a broad correction underscores the interconnectedness of digital assets and the amplified impact of large-scale liquidations.
Understanding the Liquidation Flush
The crypto market experienced a nearly $1 billion liquidation flush due to forcibly closing overleveraged positions, primarily from long bets. This occurs when a trader’s collateral falls below a certain threshold due to adverse price movements, prompting exchanges to automatically close positions to prevent further losses. Most XRP liquidations originated from long positions, indicating that many traders were aggressively betting on continued upside for the asset. Analysts view these large-scale liquidations as a necessary “healthy breather” for the market. MN Capital founder Michael van de Poppe believes that the market is simply resetting, rather than signalling the end of the broader bullish trend that has characterised 2025.
XRP’s Recent All-Time High and Driving Catalysts
XRP’s recent drop follows its all-time high of $3.66, breaking its 2018 record. This was driven by growing institutional interest in XRP, as traditional financial entities recognise its potential for efficient cross-border payments. The progress of three major bills aimed at regulatory clarity and fostering innovation in the digital asset space has boosted market confidence. Additionally, the prospect of US President Donald Trump opening up $9 trillion in retirement assets to digital asset investments has added another layer of bullish sentiment, signalling a potential flood of new capital into the crypto market. This momentum has pushed XRP past Tether, securing its position as the third-largest cryptocurrency by market capitalisation.
Ethereum Traders Weather Liquidation Storm
During the recent market correction, Ethereum (ETH) experienced significant price losses, with over $200 million in ETH positions being liquidated in the past 24 hours. This highlights the high leverage used by Ethereum traders, which amplifies losses during market downturns. Despite this, Ethereum has shown remarkable resilience and staged a swift recovery. Prices have bounced back to around $3,660, indicating strong demand and conviction among its holders.
Ethereum has been on a hot streak since Q2, gaining over 40% in the last two months, a testament to its robust ecosystem, ongoing development, and increasing institutional adoption through spot ETFs. The ability of ETH to absorb such a large liquidation flush and recover quickly speaks to its market depth and bullish sentiment regarding its long-term prospects.
Market Outlook Beyond the Short-Term Dip
Despite recent market turbulence and significant liquidations, analysts remain optimistic about crypto’s 2025 rally. They believe this is a “healthy breather” to clear out excess leverage and consolidate before its next upward move. Key catalysts supporting this bullish perspective include ongoing ETF flows, favourable macroeconomic data, and the broader narrative of digital asset adoption, regulatory clarity, and technological innovation. Corrections are a natural part of any upward trend, and seasoned traders often view short-term liquidations as buying opportunities. The resilience of XRP and Ethereum in recovering from initial shocks suggests that the underlying bullish momentum for 2025 has not been fundamentally broken.
XRP Cools Off Post All-Time High
XRP’s sharp drop on Thursday represents a cooling-off period after its impressive surge to a new all-time high. Just a week prior, XRP had broken through its 2018 record, reaching $3.66, a significant milestone that fueled widespread excitement. This rally was largely driven by a combination of growing institutional interest and a series of historic pro-crypto policy wins in Washington, including the progress of three major bills aimed at providing regulatory clarity for digital assets. Furthermore, the prospect of President Donald Trump considering opening up $9 trillion in retirement assets to digital asset investments added substantial momentum.
This confluence of factors was powerful enough to propel XRP past Tether, making it the third-largest cryptocurrency by market capitalisation, a position it still holds despite the recent price correction. The current dip is seen as a natural reaction to such a rapid ascent, allowing the market to digest gains and reset before potentially resuming its upward trajectory. The key question for traders now is how quickly XRP can regain its footing and whether it can sustain momentum to retest and surpass its new all-time high.
XRP’s Resilience: Tactical Correction, Not Rally Reversal
The recent crypto sell-off, while impactful, appears to be a tactical correction rather than a fundamental reversal of the 2025 rally. XRP, despite taking the brunt of the losses among top tokens, demonstrated resilience, quickly recovering much of its ground after briefly dipping below $3. The nearly $1 billion liquidation flush, primarily from overleveraged long positions, is viewed by analysts as a healthy market reset, clearing out excess liquidity.
While Ethereum traders faced significant liquidations, ETH also showed a swift recovery, highlighting its strong underlying demand. The broader market remains optimistic, buoyed by ongoing ETF flows, favourable macro data, and continued institutional interest. XRP’s recent all-time high, fueled by pro-crypto policy wins and institutional adoption, underscores its potential. The current cool-off is a natural part of an uptrend, and experts anticipate a continued rally. This market adjustment, therefore, provides an opportunity for consolidation, reinforcing the conviction that crypto’s 2025 bullish run is far from over.
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