XRP's 600% Rally Fades as Investor Confidence Slips

Between October 25, 2024, and January 16, 2025, XRP experienced one of the most significant rallies of the current bull market, with its value surging by 600%. This surge was driven by investor optimism that a pro-crypto presidency would benefit Ripple and its cryptocurrency. During this period, the quarterly average of daily active addresses for XRP jumped by 490%, and the price of XRP hit a 7-year high.

However, the current situation shows a decline in speculative interest surrounding XRP. Holders are increasingly facing losses rather than gains, which is dampening their risk appetite. This trend is evident in the data, which shows that while Bitcoin and XRP have both gained 500% to 600% since bottoming in 2022, the bulk of XRP’s gains came from a parabolic price increase. The daily active addresses for XRP jumped by 490%, whereas the same metric for Bitcoin increased by only 10% over the past four months.

This retail-driven surge pushed XRP’s realized cap from $30.1 billion to $64.2 billion, with $30 billion of that inflow coming from investors in the last six months. The share of XRP’s realized cap held by new investors (less than six months) jumped from 23% to 62.8%, signaling a rapid wealth shift. However, since late February 2025, capital inflows have dipped significantly. The primary reason for this decline is that investors are currently locking in fewer profits and staring at higher losses. This can be identified by the realized loss/profit ratio, which has constantly declined since 2025. Analysts suggest that this alludes to a condition where retail investor confidence in XRP may be slipping, and this may also be extended across the broader market.

Besides weakening confidence among newer investors, the distribution of XRP among whale addresses reflects a similar trend. Data shows a steady increase in whale outflows since the start of 2025, suggesting that large holders have been consistently trimming their positions. Over the past 14 days, over $1 billion in positions were offloaded at an average price of $2.10.

XRP has found support at $2 multiple times over the past few weeks, but the chance of the altcoin dropping below this level increases with each retest. On the lower time frame (LTF) of the 1-hour and 4-hour charts, a bullish divergence can be observed for XRP. A bullish divergence occurs when the price forms a lower low and the relative strength index (RSI) forms a lower high. With a fair value gap between $2.08 and $2.13, XRP might see a relief rally into this range, especially if the wider crypto market undergoes an oversold bounce. On the higher time frame chart, XRP appears bearish due to the formation of an inverse head-and-shoulders pattern, with a measured target near $1.07. There is a chance that the altcoin finds support from the 200-day moving average around the $1.70 to $1.80 mark, but XRP price has not tested this level since November 5, 2024.