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XRP trading at around $2.40 shows an uneven setup: for bears to reach their maximum pain point, the price would have to surge nearly 30% to $3.08, while the bulls would only need to dip 10% to hit their own pain line at $2.31, as per CoinGlass.
That means the bear side is taking on a lot more risk. If XRP price hits $3, it will put pressure on the current positions and might also lead to liquidations worth $15.45 million, where people who are short have to buy back into a rising market.
But on the flip side, if you are a bull, you only have to deal with a little bit of risk because your max pain milestone is so close to the current spot. That means you do not need as much capital or as much conviction to defend it.
XRP price action revealed scenario
After dropping to $2.20 in October, XRP has stabilized, sitting within a tight $2.30-$2.50 range. Sellers have not been able to push below that lower bound, and every time XRP bounces back toward $2.50, it puts pressure on the shorts because they know the $3.08 level is close in percentage terms. Meanwhile, bulls are doing alright since their downside risk is kept in check.
With shorts needing a 30% rally to avoid the worst and longs needing only a 10% drop to reach theirs, it looks like things are going to be volatile. The market does not need news to spark it; the mechanics of max pain already set the stage.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team