Crypto market liquidations hit nearly $500 million as Ripple and XRP hype dissipates over weekend

XRP, XLM and other altcoins enjoyed massive gains after Ripple's partial victory against the SEC.
However, the weekend looks bleak, with liquidations in the last 48 hours reaching $473 million.
As bearish momentum wanes, investors in major exchanges turn bearish.

Crypto markets witnessed a massive spike in bullish momentum on July 13 when the judge partially ruled in favor of Ripple in the longstanding trial. USA Securities and Exchange Commission (SEC) lawsuit against Ripple. This caused Bitcoin (BTC), Ethereum (ETH), and many altcoins to rally violently.

While Ripple's XRP more than doubled, its competitor's Stellar (XLM) token skyrocketed 107% in less than 24 hours. Other altcoins like Cardano (ADA) also saw massive gains. But as the weekend rears its head, optimism appears to be waning.

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Crypto Markets Bleed as Bulls Disappear

Since the announcement of Ripple's partial victory against the SEC on July 13 to date, $473 million worth of positions have been liquidated, according to CoinGlass data. As seen in the chart below, there are short-term and long-term selloffs on July 13 and 14, respectively. The last time a sell-off event of this magnitude occurred was between June 5-10.

Total Settlements Chart

The XRP price, which shot up from $0.469 to $0.938 on July 13, has fallen 22% since then and is currently trading at $0.726.

The price of XLM, Ripple's close competitor, went from $0.0953 to $0.197 and has since lost 32% and is currently auctioning at $0.133.

Why the sudden change in market sentiment?

The marked change in investor sentiment could be attributed to three reasons:

An inherently bearish market outlook prior to the announcement of the SEC vs. Ripple.
More comment on the lawsuit began to emerge after the initial announcement, allowing the SEC to challenge the decision in the second circuit court of appeals. Furthermore, the decision is partly a victory for the commission, as XRP sold to institutions constitutes security.
Reversion to the mean; Markets often re- mean after hype or frenzy wears off, and the ongoing pullback could be just that.

Due to the aforementioned reasons, the crypto markets appear to be returning to mean, undoing recent gains. A sign of this can be seen when investors on exchanges have changed their narrative to bearish.

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