XRP surges, led by retail – But will THIS group cause a crash?

• Ripple’s XRP gains are shaky as short-term holders dominate, raising risks of volatility and sell-offs.
• With 62% of XRP’s realized cap in short-term hands, price drops could trigger panic-driven selling.

Ripple’s [XRP] February rally sparked retail enthusiasm, driving billions into XRP and nearly doubling its realized cap.

However, with short-term holders dominating and profit margins shrinking, the foundation of XRP’s gains looks shaky.

Now, with sentiment cooling and confidence slipping, XRP might be hitting a turning point — where all that retail hype starts running into the hard truth of fading profits and a fragile setup.

XRP’s realized cap surge

Realized cap tracks the value of XRP based on the last time each coin moved — essentially a measure of actual invested capital.

In February, XRP’s realized cap nearly doubled, jumping from $30.1 billion to $64.2 billion, driven overwhelmingly by new retail inflows.

Source: Glassnode

As the chart shows, tokens held for less than six months now account for 62.8% of the realized cap, up from just 23%.

This influx of short-term holders has tilted XRP’s foundation toward newer, higher-cost investors; raising the risk of sharper volatility and profit-driven selloffs if sentiment continues to fade.

The rise of retail investors

Short-term holders now account for 62.8% of the asset’s realized cap.

This sharp rise reflects an overwhelming wave of retail entry during February’s rally, where new investors chased momentum at elevated prices.

Source: Glassnode

STHs are typically more reactive to market swings, prone to sell at the first sign of volatility. Data shows that the share of newly acquired XRP jumped from 23% to nearly 63% in a matter of weeks.

With wealth concentrated in these newer, more sensitive hands, XRP’s price is now far more exposed to sharp corrections and cascading sell-offs.

The profit/loss ratio

The P/L ratio is a vital gauge of market sentiment — measuring the aggregate dollar value of realized profits against losses. A sharp drop in this metric, as shown in the chart, reflects a loss of confidence among investors.

Source: Glassnode

XRP’s profit/loss ratio has plunged from highs to a 90-day average of 46.1, indicative of net realized losses. This downturn coincides with a surge in short-term holder dominance, amplifying market fragility.

With newer investors now largely underwater, fear-driven sell-offs become more likely.

A closer look at downside potential

When most of the supply is in the hands of STHs, things can get shaky fast for XRP. With over 62% of the realized cap held by reactive, short-term investors, even modest price drops could trigger panic-driven sell-offs.

The falling profit/loss ratio reinforces the fragility — investors are already realizing losses, suggesting growing unease.

A sudden regulatory setback, negative market sentiment, or broader crypto pullback could act as catalysts. In such a scenario, the lack of strong LTH support may leave XRP exposed to steep and swift price corrections.