Closeouts for XRP futures soared at the end of the year as bullish signals in November followed by decidedly bearish news in December whipped up the token price.
More than $ 1.5 billion in XRP futures have been liquidated since the start of November, according to data from analytics provider Bybt. Barely $ 700 million in liquidated futures were recorded between March and October.
In November, the price of XRP soared more than 220% to two-year highs just below $ 0.80 as traders anticipated a token airdrop event scheduled by the Flare Network for all XRP holders. In short, anyone holding XRP would automatically receive a portion of the new Spark token, enticing new buyers to accumulate XRP.
To fuel the frenzy, the leading US-based cryptocurrency exchange Coinbase has announced plans to support the upcoming airdrop, according to the previous CoinDesk report.
“XRP saw massive upward price movements in November due to retail investor interest in the Spark airdrop slated for December 12, 2020,” said Florent Moulin, cryptocurrency researcher at the provider. of Messari data. “The market has also seen seasoned investors rack up XRP in anticipation of a retail-driven bull market.”
XRP’s sharp uptrend quickly ended when the United States Securities and Exchange Commission (SEC) filed a lawsuit against Ripple for allegedly violating federal securities laws by selling the cryptocurrency to consumers. retail, which raised $ 1.3 billion over seven years.
Traders reacted negatively to the news, with XRP immediately starting to return much of its previous month’s gains. Institutional investors have followed suit with cryptocurrency money manager Bitwise liquidating all of its index’s XRP position and leading brokers like OSL notify customers that they have stopped all XRP trading.
The two events – the airdrop and the lawsuit – pushed XRP price volatility to its highest level since July 2018, according to data from Coin Metrics, with an increase of more than 130% in volatility since early November.
The sharp drop in XRP prices is likely due to a combination of factors, Moulin told CoinDesk. But probably most important is the SEC’s lawsuit against Ripple.
Also noteworthy is the increase in sales of Ripple co-founder Jed McCaleb, who sold more than $ 120 million worth of XRP in December, Moulin said, an amount three times the amount in previous months.
Part of December’s downward price movement was also caused by the selling of XRP holders after receiving tokens from the drop event, Moulin said.
Whatever the reason, since news of the SEC lawsuit broke, XRP has fallen more than 60% and has fallen below its pre-drop binge levels in early November, hitting $ 0.21 on Wednesday.
And with the price still falling and more than $ 350 million in futures contracts liquidated the two days before Christmas Eve, XRP investors face a not-so-happy holiday season.