XRP Price Surges Then Plummets: Is Rally Already Over?

XRP's recent price surge has come to an abrupt halt after it shed 7% in a day. The cryptocurrency had gained nearly 16% last week on a wave of forced buying, but its rally may already be over.

The surge was driven mainly by traders being forced to close short positions, and this momentum typically runs out once the initial buying pressure subsides.

XRP's biggest jump occurred when exchanges were forced to close around $300 million in short positions across the crypto market within an hour. This led to a significant short squeeze, which pushed XRP from $1.30 to a peak of $1.66 in just six days.

The rally may struggle to maintain upward momentum without new demand replacing the short covering. However, fund inflows have slowed down, with spot XRP funds bringing in only $10 million to $19 million weekly in September, compared to $28 million on August 26.