Summary
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XRP experienced a dramatic 65% drop in daily active addresses, signaling a sharp decrease in network engagement and a potential slowdown following a recent price rally.
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A speculative rally, fueled by retail investors and pro-crypto optimism, drove a surge in XRP’s price and active addresses, but this enthusiasm has since waned, leaving new investors vulnerable to losses.
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While XRP’s price briefly dipped amidst market uncertainty but subsequently rebounded, the underlying network activity remains significantly reduced, indicating a possible end to the short-term speculative phase.
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Key metrics like Realized Profit/Loss Ratio are declining, and a significant portion of XRP’s wealth is concentrated among recent holders, indicating weakening market confidence and increased vulnerability to potential panic selling if the price continues to decline.
Following a notable surge in the recent cryptocurrency bull market, XRP is currently indicating signs of deceleration.
Analysis of on-chain metrics reveals a significant 65% reduction in the number of daily active addresses on the XRP network.
Active Addresses Drop Sharply From January Peak
A substantial decrease in active user engagement is evident from the data.
XRP’s active addresses have plummeted from a high of 63,389 on January 16, 2025, to a mere 22,859 by April 3.
This sharp contraction signifies a considerable downturn in network activity.
Network Engagement Declines After Speculative Rally
This decrease in network engagement comes after a period of intense speculative buying interest between November 7, 2024, and mid-January 2025.
During this phase, XRP experienced a dramatic price increase exceeding 485%.
Pro-Crypto Political Optimism Fueled Initial Surge
The optimistic market sentiment driving this price surge was primarily fueled by investor expectations that a political shift favoring cryptocurrency regulations could positively impact Ripple and its associated ecosystem.
During this period of heightened enthusiasm, daily active addresses on the XRP network spiked by more than 432.6%.
Retail-Driven XRP Rally Loses Momentum
However, subsequent events illustrate a typical scenario where short-term market speculation overtakes genuine, sustained demand.
Realized capitalization, a measure of network value, increased considerably from $30.1 billion to $64.2 billion.
Data from Glassnode indicates that nearly $30 billion of this expansion occurred through capital injected into XRP within a short six-month span.
Wealth Concentrates Among New XRP Holders
This rapid influx of capital led to a concentration of wealth among more recent investors.
Over 62.8% of XRP’s realized capitalization is now held by investors who entered the market during this limited timeframe.
Cautionary Signals Emerge Due to Investor Vulnerability
When considering this trend alongside significant retail participation, the substantial increase in new holders raises red flags. A considerable proportion of investors now hold XRP with an elevated cost basis, making them potentially more susceptible to losses during periods of market volatility.
Speculative Wave Retreats, Market Confidence Weakens
As market enthusiasm waned toward the end of February, indicators of a receding speculative surge became evident.
The Realized Profit/Loss ratio, a metric tracking the profitability of trades, has been trending downwards since January.
This decline suggests that investors are increasingly realizing losses and securing fewer profits – often an early indication of diminishing confidence in the market.
Risk of Panic Selling Increases as Holders Face Losses
Coupled with the pronounced reduction in network activity, the declining Profit/Loss ratio suggests that many of these recent XRP investors are now experiencing losses on their holdings.
This situation amplifies the potential for panic-driven sell-offs as investors seek to mitigate further losses.
XRP Price Volatility and Market Jitters
Amidst broader market anxieties triggered by President Trump’s newly announced global tariffs, XRP briefly dipped below the critical $2 psychological threshold.
Despite this dip, XRP has since demonstrated resilience, recovering by 5% intraday and trading at $2.13 at the time of reporting.
Also Read: XRP Tests $2 Support Goldman Sachs Predicts Increased Fed Rate Cuts
*Disclaimer*: We at Bitcoinleef.com present you with the latest information in the crypto market. However, this information should not be regarded as financial advice and viewers should consult their financial advisors before investing.
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