$70M XRP Liquidation Cascade Exposes Crypto's Leverage Problem

$70 million vanished in a matter of hours. That's how much XRP futures positions got liquidated as the token plunged 7% to $1.75, offering a stark reminder of crypto's leverage problem.

This wasn't your typical crypto selloff driven by regulatory news or whale movements. Instead, it was a textbook example of how overleveraged positioning can amplify market moves, turning a modest bitcoin-led decline into a full-blown liquidation cascade.

When Support Becomes Resistance

The carnage began at $1.79 — a level that had served as reliable support for XRP bulls. But when bitcoin started sliding toward $81,000, dragging the broader crypto market down, that support level cracked under pressure.

What made this selloff particularly brutal was the volume surge during the breakdown. Exceptional trading volume typically signals institutional participation, not just retail panic selling. When big players move, they move fast and in size.

The $1.79 break flipped the entire $1.79-$1.82 zone from support into resistance — a technical shift that could keep XRP capped for the near term. It's a classic example of how market structure can change in minutes during high-volatility periods.

The Leverage Trap

Derivatives data tells the real story. Of the $70 million in liquidated XRP futures, the overwhelming majority came from long positions. This reveals how crowded the bullish side had become, creating a powder keg waiting for a spark.

When XRP dropped from $1.88 to $1.74, it wasn't just price discovery — it was forced selling. Leveraged traders who'd been riding the wave suddenly found themselves facing margin calls, creating additional selling pressure that pushed prices even lower.

The modest rebound that followed lacked conviction, with volume fading on the bounce. That's typically a sign of stabilization rather than reversal, suggesting the selling pressure has eased but bulls haven't yet regained control.

Bitcoin's Long Shadow

What's particularly telling about this XRP selloff is that it had nothing to do with Ripple-specific news. Despite the company's legal victories and growing institutional adoption, XRP remains tightly correlated to bitcoin's moves.

This correlation dependency highlights a broader challenge for altcoins: breaking free from bitcoin's gravitational pull to establish independent value propositions. For XRP, despite its utility in cross-border payments and regulatory clarity gains, market sentiment still hinges on bitcoin's direction.

Traders are now watching $1.74-$1.75 as the immediate line in the sand. A hold here could lead to consolidation, but a break opens downside risk toward $1.70. On the upside, bulls need to reclaim $1.79 convincingly to shift the technical structure back toward neutral.