Recent on-chain records indicate an unpleasant three months for XRP holders as most investors decided to trade their investments at prices below their entry point. The data indicates that the selling pressure in the fourth quarter was very high, which was an indication of a high level of losses in the market. Analysts monitor this trend using the realized loss measure which captures losses each time holders transfer coins at prices below the initial purchase point.
Realization gain/loss ratio validates capitulation
According to Glassnode, XRP’s realized profit/loss ratio fell below 0.5 in Q4 2025, which is an indication that the losses are much larger than the profits. This decline is an indicator of capitulation, where investors hastily abandon their positions after prolonged downward pressure. In this time frame, XRP saw a 7-13 year-on-year decline and closed at around 1.86 towards the end of December. Emotional selling rather than an orderly distribution is indicated by the intensity of realized losses.
History Trends Lead to Muscle Fatigue
Similar realization structures of profit/loss ratios have tended to signify periods of market exhaustion in past crypto cycles. Bitcoin and other cryptocurrencies have recorded similar values in the past, before rebounds of 20 to 50 percent occur in the coming months. Although it cannot be predicted from history, traders generally consider extreme levels of realized losses as an indication of weak hands, and this can result in lower selling pressure.
Foreign exchange reserves decreased by 45 to approximately 2.6 billion XRP despite strong sales, but this is an indication that large holders were dumping them and not preparing to sell. This pattern holds despite the entry of XRP-related ETFs to the tune of $1 billion into the market. This retail capitulation gap and falling foreign exchange balances tend to indicate that whales are stockpiling, leading to a potential drop in whale supply in the event of a surge in demand in 2026.
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