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In the early months of the year, the price of XRP experienced a sudden surge, which was markedly reflected in on-chain data. Notably, the fluctuations in February led to a near doubling of XRP’s realized market cap. However, this influx of capital proved to be short-lived, with both investor interest and potential for gains rapidly declining as March approached. According to Glassnode, the notable influx of new capital into the XRP network raises new risks.
Realized Market Cap Data Indicates New Investor Flow
According to Glassnode’s on-chain analysis, during the price increase of Ripple 
$2’s XRP in February, the realized market cap skyrocketed from $30.1 billion to $64.2 billion. The $30 billion increase in realized market cap was largely fueled by the entry of short-term investors. Generally, such sharp rises indicate the influence of individual rather than institutional investors, and this holds true for XRP as well.
However, this concentration of capital was not sustained for long. Following February, the flow of capital slowed down, and the price momentum began to decline. The participation of short-term investors has rendered XRP’s price structure more fragile. Given that most investors acquired XRP at high costs, the risk of selling pressure is increasingly rising.
Rising Supply Ratio Weakens Resilience
The ratio of XRP held for less than six months within the realized market cap has surged to 62.8%. At the beginning of January, this ratio was only 23%. This rapid increase clearly indicates that new investors who recently purchased XRP hold a significant portion of the market.
While the influx of new investors signifies fresh capital in the market, it also brings about instability risks. This demographic tends to be less experienced and more prone to emotional decision-making. During such periods, a potential correction could trigger panic selling, leading to sharp declines in prices. Glassnode reports that the supply structure of XRP has become more “short-term” and thus more sensitive.
Falling Confidence in XRP Drives Down Profit/Loss Ratio
On the other hand, a steady decline in the profit/loss ratio for XRP investors has been observed since January. Fewer investors are in profit while more are incurring losses, typically signaling periods of diminished investor confidence. According to Glassnode’s analysis, most XRP investors are currently facing potential selling pressure due to having purchased at high prices.
The fact that investors are holding their assets at a loss often indicates an impending breaking point in the cryptocurrency market. Particularly when new investors dominate, impatience tends to drive market movements. Consequently, the current scenario for XRP reduces upward hopes while heightening downward risks.
