The XRP price has experienced a lot of volatility in the first two weeks of October, unlike previous months. This trend will continue as a critical benchmark for a potential ‘short squeeze’, a price movement that will remove liquidity from long or short positions.
At the time of writing, the XRP price is trading at $0.48 with a loss of 2% in the last 24 hours. The cryptocurrency posted a loss of 9% over the past seven days and was the worst performer in the top 10 by market capitalization, closely followed by Solana (SOL).
XRP price determines trajectory for short squeeze?
The crypto market has been experiencing a spike in volatility since October. After months of Bitcoin and Ethereum’s sideways movement, the XRP price broke the trend and brought new life to the emerging sector.
The spike in volatility was registered when the US Securities and Exchange Commission (SEC) lost its case against payments company Ripple. A US judge favored the company and deemed the XRP token outside the country’s securities laws.
This event pushed XRP to new yearly highs, but the cryptocurrency has lost some steam. Uncertainty in the crypto market remains high and any individual bull run seems likely to lose steam, as evidenced by XRP’s latest price action.
However, the current status quo is fragile and new data suggests an aggressive move is in the works. A pseudonymous analyst shared the chart below shows the spike in Bitcoin Open Interest.
The analyst claims that the benchmark is at a critical point that often leads to sudden movements in the price of Bitcoin, XRP and other cryptocurrencies. In the short term, this spike in volatility could cause XRP to return to critical support levels.
However, the most likely scenario is that the Short Squeeze, the sudden spike in volatility, acts as a tool for prominent market participants to drain liquidity from both sides, longs and shorts.
Crypto Poised for Negative Price Action
Longer term, the crypto market and more prominent cryptocurrencies could become an obstacle to any benefit from XRP. According to another analyst, the sector is preparing for a significant downward move.
The analyst bases this theory on the upcoming Bitcoin Halving. This event has a profound impact on all other cryptocurrencies, and right now BTC is at a critical point where historical data points to a deep pullback to around $20,000.
If BTC follows this trajectory, XRP could return to its pre-SEC winning levels. However, this downward price action could give the bulls an opportunity “perfect” opportunity to accumulate before an all-out bull run unleashes its power on the emerging sector.
As News reported, historical data also points to great performance for XRP in the second half of the year. The cryptocurrency enjoys a return on investment (ROI) of 30% during this period.
Cover image from Unsplash, chart from Tradingview