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The Labor Day drop in XRP's price to $1.38 triggered a cascade of forced margin calls, causing a rare market-microstructure anomaly. According to CoinGlass, the asset's hourly liquidation imbalance briefly exceeded 10,535% — the volume of forcibly closed long positions surpassed short sellers' losses by more than a hundredfold.
At press time, XRP had already rebounded from its local bottom and was trading at $1.3892, forming a reversal pattern on lower time frames.
The rapid decline in XRP/USD from its daily high of $1.4150 triggered protective stop-loss orders among highly leveraged traders. While most of the market's attention was focused on large daily losses in Bitcoin ($10.72 million) and Solana ($4.55 million), an instant technical storm erupted in XRP's order book.
Why XRP's local sell-off is not yet a reason to panic
The underlying cause of the aggressive long squeeze was overcrowded positioning near the critical Liquidation Max Pain zone. On the monthly horizon, XRP's price came close to the point of maximum pain for sellers — Short Max Pain at $1.4368. Traders who accumulated long positions in anticipation of an inevitable breakout above this barrier created an excessive concentration of orders sensitive to any price fluctuations.
The price is now only 3.94% below the short-side pain level, where $9.20 million in bearish positions could be liquidated. Meanwhile, the long-side level — Long Max Pain at $0.9837 — remains more than 28.83% below the current price, with $24.29 million in potential liquidations. This confirms the local nature of the current shakeout.
Exchanges reacted to the incident in opposite ways. KuCoin and Gate recorded net capital outflows, with open interest falling by 5.16% and 4.07%, respectively. Meanwhile, MEXC and Bybit became the epicenters of the speculative battle. Daily trading volume on MEXC jumped 118.32% as traders began aggressively buying the dip during the liquidation event itself.
This impulse-driven buying returned the price to $1.3892. Technical indicators moved out of critically oversold territory, generating a local bullish signal.
The nearest obstacle for buyers is now the resistance level at $1.4010. A breakout above it would confirm the definitive end of the evening's bearish microtrend.
Dan Burgin
U.Today Editorial Team
