XRP Is One Of The Most Shorted Cryptocurrencies – What Should We Know?

Amid the recent turmoil in the crypto market, Ripple Labs-backed XRP Ledger is poised to regain its bullish momentum, according to an analysis by Santiment.

Despite the recent declines in the market, heavy short activity against XRP is seen paradoxically as potentially "rocket fuel” for a price spike.

Santiment emphasized , that XRP, along with Cardano (ADA) , is among the most heavily shorted digital assets. This intense shorting is viewed positively by the patient bulls, as the liquidation of these positions can lead to an increase in price.

The long/short ratio of 0.9623 is leaning towards more short positions, which reinforces the bearish outlook. The weekly liquidation heat map shows concentrated leverage around the $0.50 level.

Key support levels are identified between $0.48 and $0.50, while resistance is noted near $0.52. Movements beyond these levels can trigger significant liquidations. The data of CryptoQuant show a significant increase in open interest (OI) for XRP, suggesting a growing investor expectation for price increases, increasing market liquidity and efficiency.

Market analysts are bullish on XRP's potential, with forecasts suggesting a rise to $2.71. Developments such as Ripple's lawsuit against the SEC and the integration of the XRP Ledger with the Ethereum Virtual Machine (EVM) could also affect XRP's long-term valuation.

Although at the time of writing XRP is trading at $0.48 with a slight decline over the past 24 hours, the current situation shows the potential for a bullish reversal. The combination of significant short position activity and high liquidation leverage creates the conditions for a potential short squeeze and subsequent price rise.