XRP price spiked past 40% in the past 24 hours, recording a 52% gain at the day's peak. Backside the surprising rally was a large short squeeze that acquired massive volatility within hours.

It is axiomatic that the upsurge was driven by a short clasp across futures exchanges considering of the speed of the rally.

XRP/USD hourly candle chart (Coinbase). Source: TradingView.com

Information technology took XRP around iv hours to surge from $0.2536 to as loftier as $0.3120. Since then, it has pulled back to effectually $0.3550 on major exchanges, including Binance.

What triggered the big XRP short clasp?

On Dec. 23, when the entire market corrected, XRP saw the highest amount of liquidations, surpassing both Bitcoin (BTC) and Ether (ETH).

Liquidations occur in the futures market when the asset's price sees a large toll move and a long (buy) or a short (sell) position is overleveraged.

As an example, if a trader uses a 10x leverage, a trader can trade an amount that is x times larger than the base of operations uppercase. But if the asset's price moves against the position past 10%, the position is liquidated and becomes worthless.

In the example of XRP, a long squeeze occurred after the U.s. Securities and Exchange Commission filed a complaint confronting Ripple and two of its executives.

Excessive shorting of XRP followed as the price of XRP dropped to as low as $0.2138. But because the market swayed severely to shorts, a short squeeze occurred on December. 25.

Consequently, XRP price saw a rapid upsurge within iv hours. In the last 24 hours, data from Bybt.com shows that $73.v million worth of XRP futures contracts were liquidated.

XRP liquidations. Source: Bybt.com

Some technical analysts predicted an XRP short squeeze, spotting the trend of excessive shorting. A pseudonymous analyst known as "Crypto ISO" said:

"XRP probably goes upwardly. Is it prudent to brusk something after such a large drop with the news already out? Not sure what the bull case is really and wouldn't bear on it but likewise wouldn't endeavour and milk much more on a short. Coinbase delisting might be last hitting if that happens."

XRP remains at risk of delisting by U.South. exchanges

Analysts remain divided on XRP's short- to medium-term future. Some say that even if XRP is considered a security in the U.South., it is used globally, and every bit such, the SEC'due south case lonely would not mean the end for XRP.

A pseudonymous trader known as "Apparent Crypto" said that XRP is not a security in Singapore, Nihon, and another jurisdictions. He wrote:

"90% of Ripples customers are not in the The states. 90+% of $XRP trading volume occurs on exchanges outside the United states of america. $XRP is NOT a security in Singapore, the Britain, Switzerland, and Japan. If y'all remember the SEC instance is sending $XRP to $0, you may not exist thinking objectively. $XRP is global."

Notwithstanding, the lawsuit will likely yet accept a major bear upon on the token, since Ripple is a U.S.-based visitor and XRP supply is managed by American citizens. Hence, "Neko," a cryptocurrency investor, said it is still a big effect. He stated:

"This is truthful most the volume. Simply you also also forgetting that direction of $XRP are US citizens and and then is the corporation. If the SEC deems it a security, exchanges that interact with US clients will accept to delist. I wouldn't say it's a 0 but it'due south still a big consequence."