XRP Faces Double-Sided Liquidation Pressure as Binance Dominates Derivatives Activity

XRP has experienced a sharp sell-off following a two-sided liquidation wave that wiped out both long and short positions on major exchanges. The price declined 6.35% over 24 hours as of Jan. 7, 2026, closing at $2.22. This decline followed a $2.39 intraday high, marking a significant pullback as traders engaged in profit-taking after volatile swings according to analysis.

Data from crypto analytics firm CryptoQuant shows that between Jan. 5 and 6, $4.4 million in short and long liquidations were triggered, with Binance absorbing $3.09 million of the losses. The exchange remains the central hub for XRP trading.

XRP's volatility has led to a leverage reset, where traders repeatedly opened and closed long positions without establishing durable support. Coinglass data indicates that long positions still make up 69% of total positions, showing crowded exposure despite ongoing liquidations.

Why Did This Happen?

The liquidation waves were driven by over-leveraged traders caught in a short squeeze and subsequent long squeeze. On Jan. 5, short liquidations reached $24.4 million, with $8 million concentrated on Binance. The next day, long liquidations surged to $22.9 million as the price slid below $2.30.

This pattern reflects unstable positioning rather than a directional breakout. The market is reacting to derivatives flows rather than sustained spot demand, with leverage-heavy exposure leading to repeated price resets.

How Did Markets Respond?

Trading volume for XRP dropped by 30.42% in 24 hours, falling to $5.73 billion. This decline came as the price breached the $2.30 support level, raising concerns that XRP could fall further to $2.02 without a strong rebound.

ETF inflows into XRP continue to rise, with U.S. spot ETFs absorbing over $1.6 billion in cumulative inflows since late 2025. Despite the recent price drop, XRP ETFs saw $19.12 million in net inflows on Jan. 6 alone.

What Are Analysts Watching Next?

Analysts are focusing on key support and resistance levels. The $2.05 to $2.10 zone is critical for sustaining a rebound, while the $2.33 to $2.35 area could determine whether XRP breaks out toward $2.64.

Institutional demand remains strong, with Ripple expanding its services and acquiring firms like Solvexia to improve financial automation and compliance.

Technical indicators suggest XRP is attempting to break out of a falling wedge on the daily chart, a pattern historically associated with bullish reversals. If confirmed, the price could target $2.60–$2.70.

XRP also faces a long-term resistance zone near $2, where historical price data shows repeated failures to break through. Analysts suggest a clean close above $2 would indicate supply exhaustion and open the door to further gains.

The liquidation-driven environment highlights the growing influence of derivatives on short-term price action. Until positioning stabilizes and liquidation pressure subsides, XRP's price remains likely to remain reactive to leverage flows.