XRP Price If Crypto Markets Suffer Another $1 Billion Liquidation Event Before Bull Run?

XRP price has been trending sideways for the past week, which is worrying for investors as this consolidation is part of a bearish continuation pattern. Despite the drop, XRP is still up 3.8% over the last 7 days, a small recovery from the steep fall the asset experienced at the start of October.

Since November 2022, the crypto market has experienced several critical liquidation events. In March 2023, a $500 million liquidation led to a sharp fall in prices, while another $700 million liquidation in July 2023 caused further market uncertainty. Given these liquidation events in 2023 and 2024, is another liquidation event brewing for crypto?

Crypto analyst Cole Garner predicts that a bull run is about to come because a common pre-requisite just appeared. According to Garner, when liquidity on-chain starts tightening, it signals that capitulation is near, and this, he notes, is the pre-requisite for a full-blown bull run.

How Crypto Market Sentiment And Historical Data Could Impact XRP Price

The crypto market has seen multiple liquidation events for the past two years, with significant sell-offs occurring in various months. In November 2022, a liquidation event crash wiped $300 million off the crypto market cap, reducing it by 27% in two days, from $1.035 trillion to $735 billion.

Similarly, and most recently, the August 5 crash recorded over $1 billion in liquidations, while September 6 saw $295 million whipped off the market. These crashes constituted a 30% and 11% drop, respectively, which resulted in the devastation of altcoins.

Additionally, the 2024 bull cycle resembles the 2016 bull run, in which there was a 35% market crash in August, which also marked the beginning of the last phase of the bull market. This could be what Garner refers to as liquidity-tightening. It could trigger a broader market sell-off, impacting XRP price and other cryptocurrencies.

These events show the market’s vulnerability to large-scale liquidations and the potential for further price drops if they happen. History has always been a great predictor of the future, and if the two cycles continue to align, then the August 5 crash should be the last major crash until Q1 2025.

XRP Price Analysis

If another $1 billion liquidation event were to occur, the XRP price could be significantly impacted. Based on historical data, XRP has shown sensitivity to market-wide sell-offs, often experiencing sharp declines in response to large liquidation events.

For instance, during the previous $1 billion liquidation, the Ripple price dropped by approximately 34% from $0.67 to $0.44. 

Given this historical trend, another $1 billion liquidation could lead to an even more pronounced price drop, potentially pushing the XRP price to $0.34 or lower.

Conclusion

If such a liquidation event were to happen, it would provide an opportunity to buy some top altcoins and XRP at a discount. The bull market that follows the liquidity crunch may see crypto prices rise higher if the cycle replicates the 2016 market.

Frequently Asked Questions (FAQs)

1. How have previous liquidation events affected the crypto market?

Since November 2022, several significant liquidation events have impacted the market. A $500 million liquidation in March 2023 and a $700 million liquidation in July 2023 led to substantial market declines. More recently, a $1 billion liquidation in August 2024 caused a 30% market drop, with XRP and other altcoins suffering sharp declines.

2. How does liquidation affect XRP price specifically?

During past liquidation events, XRP has experienced notable price declines. For example, during the $1 billion liquidation in August 2024, XRP dropped by 34%, from $0.67 to $0.44.

3. What impact could a $1 billion liquidation have on XRP?

Based on historical trends, another $1 billion liquidation could cause XRP to fall by around 34%, bringing its price to approximately $0.34 or lower.

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Evans Karanja

Evans Karanja is a crypto analyst and journalist with a deep focus on blockchain technology, cryptocurrency, and the video gaming industry. His extensive experience includes collaborating with various startups to deliver insightful and high-quality analyses that resonate with their target audiences. As an avid crypto trader and investor, Evans is passionate about the transformative potential of blockchain across diverse sectors. Outside of his professional pursuits, he enjoys playing video games and exploring scenic waterfalls.

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