Get Liquidated 700 million USD period XRP astonishingly showed 1,200 times "multiplier effect", ETF approval may reach trillion USD market capitalization

On October 10-11, last Friday, the crypto market experienced the largest single-day liquidation wave in history, with over $19 billion in funds wiped out. During this time, the price of XRP was severely impacted, plummeting from $2.8 to $1.58 within a few hours, ultimately resulting in a daily decline of over 43%. Market commentator Zach Rector later analyzed that XRP exhibited an astonishing "market capitalization multiplier effect" of over 1,200 times during the most severe period of the big dump, indicating that a small net outflow of funds triggered a loss of hundreds of billions in market capitalization. He believes this exposes the vulnerability of XRP's market structure and predicts that once institutional funds flow in through ETFs, it could bring a rise of $500 billion to $$1 trillion in market capitalization. However, the "exchange fund flow" data that this analysis relies on has limitations; cumulative volume divergence (CVD) is a more accurate indicator of real buying and selling pressure.

Epic Liquidation: XRP Price Halved and Market Sensitivity

On Friday, October 10, the crypto market experienced an unprecedented sell-off, with large-scale liquidations leading to the evaporation of over $190 billion in funds across the market. In this catastrophic crash, XRP was hit the hardest, with approximately $7 billion liquidated, of which about $610.5 million was from long position liquidations. The price of XRP free-fell from $2.8 to $1.58 in just a few hours, a loss of over 43% in value, before rebounding and closing at $2.37. Currently, the price of XRP has slightly rebounded to $2.55.

· An amazing 1,200 times multiplier effect emerges

Market commentator Zach Rector tries to quantify the extreme volatility of XRP after the big dump. He cites data from CoinGlass to calculate the so-called "market capitalization multiplier effect" to measure the ratio between changes in market capitalization and net capital outflows (or inflows).

Rector claimed that during the most intense period of the crash, XRP recorded a net outflow of approximately $55.79 million, while its market capitalization fell from $152 billion to $830 billion, resulting in a market capitalization loss of $6.997 billion. The "multiplier" calculated based on this is approximately 1,254 times. He pointed out that this is the largest multiplier observed since he began tracking market inflows and order book data in 2024.

If the time window is extended to four hours, the total outflow amounts to $64.87 million, and the market capitalization loss falls from $162 billion to $820 billion (a loss of $78.85 billion), with a multiplier slightly smaller at 1,215 times.

Interpretation of Market Structure Behind the Multiplier Effect and Future Outlook

Rector believes that these huge multiplicative ratios indicate that relatively insignificant inflows or outflows of funds in XRP could trigger massive fluctuations in its market capitalization. He speculates that the sparse order book and limited liquidity make the XRP market extremely sensitive, where even minor selling pressure can have a disproportionately large impact.

· Institutional funds may bring a trillion-level rise

Rector concluded that the market structure of XRP is fragile and dominated by a few large players. He further speculated that once institutional funds begin to flow in through the upcoming XRP spot ETF, the same multiplier effect will also drive the price to rise significantly.

He compared this scenario to the surge of Bitcoin after the ETF approval and quoted the prediction of Canary Capital CEO Steven McClurg: the XRP ETF could attract $50 billion to $100 billion in inflows in its first month. Based on this, Rector proposed a "conservative" multiplier of 100 to 200 times and estimated that the market capitalization of XRP would increase by $500 billion to $1 trillion from the current level.

Limitations of Analysis: Exchange Capital Flow ≠ Real Buying and Selling Pressure

Although Rector's analysis presents an interesting perspective, there are fundamental limitations in its data foundation. The "exchange fund flow" data he uses refers to the movement of XRP tokens in and out of mainstream exchanges like CEX, rather than the actual inflow or outflow of funds in the entire XRP market.

· The Essence of Exchange Capital Flow and the Importance of CVD

The capital flow data of the exchange only reflects the behavior of traders transferring their positions between wallets and exchanges, which is usually a reactive operation after price fluctuations and does not truly reflect changes in market capitalization.

A more effective indicator for measuring actual buying and selling pressure is the Cumulative Volume Delta (CVD). CVD tracks the balance between buy orders and sell orders over a period of time, providing a more accurate insight into how actual trading activity impacts price changes.

The price movement in the days following the crash on October 10 highlighted the differences between the two:

· From October 11 to 13, XRP rose for three consecutive trading days;

· Exchange fund flow data is inconsistent: On October 11, there was an outflow of $600 million, on October 12, an inflow of $2,144 million, and on October 13, an outflow of $4,705 million.

These mismatched data indicate that simple exchange fund flows cannot explain the steady price recovery or the real transfer of capital. Although Rector's view that "a small net fund flow can cause significant fluctuations in XRP's market capitalization" is accurate, the metric used to precisely measure these net fund flows should be CVD, not the net flow of exchanges.

It is worth mentioning that with multiple favorable developments for XRP approaching, investors are continuously paying close attention to the latest progress. So how do newbies buy XRP? The simplest way is to complete the purchase through a regulated exchange or mobile application. Just register an account, bind a payment method, and you can easily buy XRP and start holding it, suitable for long-term investment or beginner learning.

Conclusion

XRP's super high "market capitalization multiplier effect" displayed during the big dump on October 10 profoundly reveals its sensitivity to the market under extreme conditions. Although this phenomenon macroscopically suggests that the XRP market structure is fragile due to insufficient liquidity, the exchange fund flow data relied upon for its analysis cannot accurately quantify the true buying and selling pressure. In the future, with the potential landing of XRP ETF, the inflow of institutional funds will undoubtedly have a huge impact on the market, but investors should pay more attention to indicators like CVD that measure real trading activity, rather than predicting trillion-level market capitalization growth solely based on exchange fund flows. The market structure of XRP is on the brink of significant change, and precise identification of risks and prudent assessment of liquidity will be key to investors' success.

Note: This article is for informational purposes only and does not constitute any investment advice. The crypto market is highly volatile, and investors should make decisions with caution.