XRP Liquidation Pressure Eases as Derivatives Contraction Boosts Token
The pressure on XRP traders to liquidate their positions has eased in recent weeks, according to an analysis by Cryptoquant. The analysis found that forced position closures on Binance have decreased after repeated liquidation spikes from late July through September.
This contraction in derivatives is a positive sign for the token's price. Binance's outstanding XRP derivatives positions declined by approximately 32% between August 22 and September 17, from around $323 million to $219 million.
The analysis also noted that long liquidations appear to be higher than short liquidations, suggesting that long positions have been more heavily affected by recent downward price movements. However, the network value-to-transactions ratio (NVT) declined 69.28% to 36.97 in the analysis, which could potentially support prices if more value moved across the blockchain while NVT decreased.
The distinction between blockchain transfers and purchases is crucial in understanding XRP demand. Spot buying involves acquiring XRP itself, whereas perpetual futures provide price exposure without an expiration date and can be traded with leverage on centralized exchanges or decentralized platforms that execute trades through blockchain software.