In February, Ripple ($XRP) experienced an extraordinary increase, with the cryptocurrency’s Realized Capital almost doubling from $30.1 billion to an astonishing $64.2 billion.
This $30 billion increase in capital largely resulted from new investors rushing into the market—an influx that’s definitely pointing to a retail-led surge in interest. But, you know, all this new money coming in so quickly also makes for a more fragile market structure that might not have the long-term sustainability many of those retail investors are counting on.
Since the influx of new dollars peaked in February, retail interest in XRP has cooled. The appearance of new buyers in the market has become a lot less frequent, in fact almost nonexistent. And the surge that began in late January has, at best, flattened out. At worst, it’s looking like a total loss retracement: no lower lows in sight, and a clear bounce off a key support area. So are we done with XRP? Not quite, but there are definitely some warning signs.
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The Concentration of New XRP Holders: Risks of Fragility
Examining Ripple’s Realized Capital more closely reveals a noteworthy transformation in its investor base. Since February, the amount of XRP in existence for less than six months that counts as part of the Realized Cap has rocketed to 62.8%. At the beginning of 2023, only 23% of the Realized Cap came from XRP that was in circulation for less than six months. So what’s new? Much of this increase in new XRP holders seems to have come from an influx of retail investors. This transfer of tokens from Ripple’s quiet hands to the much louder hands of retailers has bumped the XRP price up quite a bit over the last couple of weeks.
During #Ripple’s Feb surge, Realized Cap nearly doubled from $30.1B to $64.2B – a $30B inflow largely from new investors. This short-term capital spike points to retail-led momentum, which has since cooled off as inflows slowed post-February. pic.twitter.com/Oe40qujPcU
— glassnode (@glassnode) April 8, 2025
The recent concentration of XRP in the hands of new buyers suggests that many more investors are now holding the coin at higher price levels. The elevated cost bases of these new holders mean that, should the price of XRP experience a downturn, a much larger swathe of the market may be looking at potential losses. The panic potential of this very uptight large holder cohort is now the main downside catalyst for the XRP price.
Profit/Loss Ratio Declines: Weakening Conviction Among Investors
Ripple’s profit/loss ratio has been consistently dropping since January, and this could indicate that investor confidence is not what it used to be. Not as many folks are seeing profits as before, and a good number of us are seeing more losses than we’re comfortable with, which is just not good for the rally’s health. The profit/loss ratio is one of those key metrics that just tells you a lot about the market’s overall health. When it’s high, it generally means that folks are feeling pretty good about things and participating in the market.
The decrease in profit/loss ratios also indicates that the market is more populated by those whose cost basis for XRP is higher, which makes it increasingly difficult for them to turn a profit unless the price keeps rising.
Of course, this safety issue could also lead to less market participation in general and a further cooling off of retail momentum, which could weaken demand even more.
Then, if we see a price dip for XRP, that could lead to even more selling and even less demand, which could lead to another price dip—and here we are again—if this happens repeat this process a couple of times, and you’ve got a potential tornado of XRP price weakening just waiting to happen.
Top-Heavy Market Structure and Increased Vulnerability
New investors hold the XRP concentration, and the profit/loss ratio is steadily declining, so a new picture is now being drawn of the XRP market structure. It is a market structure that has newly surfaced, with the XRP surge in February bringing a fresh capital influx scene along with it. This is a scene where the rising top-heaviness and the ongoing increase of at-risk recent holders could snap back like a slingshot into the price levels of XRP. How sustainable, then, are those fresh pump prices of XRP?
The new investor influx means a larger portion of the market’s supply is now held at the higher prices we’ve seen lately. That makes the market more fragile. And this shows up most clearly in the happening right now with XRP. As its price cools, many of these new holders are finding themselves right around or under water, or very close to it. If the price drops, we can expect many of them to panic and sell, making any decline in price even more sharp and, you know, sharpier.
This situation highlights a wider trend in the cryptocurrency sector, where the drive of retail investors can push prices to unsustainable heights, only for them to drop back down when the retail enthusiasm fades. In the known volatility of the crypto market, the concentration of newer XRP holders—whose average cost is well above where the price currently is—could make for an accelerated drop in the price if retail sentiment shifts from bullish to bearish.
Looking Ahead: Market Sentiment and Potential Risks for XRP Investors
The question remains for XRP holders: Can the token get back its upward momentum, or is the market so fragile that a much more significant decline is inevitable? We have seen the euphoria of 2020 and 2021. But after such a long bear market, hope alone cannot carry XRP up much further.
The risk of panic selling among XRP’s newer holders is more pronounced now that the market is cooling. Today’s market structure—largely driven by retail participants—suggests that XRP is more vulnerable to sharp price movements, especially if the broader market turns against us. This volatility is a natural part of the crypto landscape, but with a market cap becoming increasingly top-heavy, it could just as easily lead to big price drops.
In summary, even if February was a good month for Ripple and XRP, the development of these assets since the beginning of 2023 is starting to look like a warning sign—not just for Ripple and for holders of XRP, but for the entire crypto market. The XRP market seems to be contracting.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
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