Loss-Making XRP Supply Surges As Market Struggles To Find Support

XRP briefly surged on Monday as the day drew to a close, but the leading altcoin is still heavily feeling the ongoing bearish pressure across the broader cryptocurrency market. During this highly volatile period, the level of supply sitting in a loss is growing rapidly, indicating a change in market dynamics.

XRP Share Of Supply In Loss Spikes

With the bearish side taking control of the market, XRP continues to face mounting pressure, keeping its price stuck below the $2 mark. A clear indication of the mounting pressure is the growing portion of XRP’s circulating supply slipping into the loss territory, which underscores the market strain on the altcoin.

Steph is Crypto, an investor and strategist, shared this development on X using data from Glassnode, a popular on-chain data analytics platform. After the expert’s examination of the chart, he reported that approximately 36.8 billion XRP are currently in loss amid recent price weakness.

This massive figure suggests that nearly 60% of the altcoin’s entire supply in circulation is underwater, demonstrating the lack of bullish activity. With more holders now sitting on notable unrealized losses, market sentiment is being shaped by broader uncertainty. Furthermore, this spike in loss-making supply typically indicates a pivotal stage in market cycles, when investor confidence is put to the test and volatility tends to rise.

Source: Chart from Steph is Crypto on X

When compared to highly bearish periods in past market cycles, this percentage of supply in loss appears to be quite higher. According to the expert, the current figure is more than the one seen during the COVID period, the China Ban, and the collapse of the FTX cryptocurrency exchange in 2022.

Nonetheless, with XRP trying to stabilize while a larger portion of its supply is still underwater, the present situation might lead to additional downward pressure or pave the way for a possible recovery when market dynamics eventually change.

Despite XRP’s share of supply in loss spiking, investors’ activity on cryptocurrency exchanges is painting a different picture of the market. More tokens have been leaving these centralized trading platforms at a significant and rapid rate.

X Finance Bull highlighted that XRP’s reserves on exchanges are shrinking, as the total balance fell by over 3 billion XRP, underscoring a major supply shift. Prior data shows that shrinking exchanges’ supply often leads to the tightening of the market, especially if buyers step in.

Major Liquidity Clusters Are Appearing

After weeks of sideways performance, Xaif Crypto, a technical analyst, has delved into XRP’s liquidity heat map, revealing that the altcoin is at a crucial moment. Currently, the token is sitting between major liquidity clusters on both sides. At this point, the next decisive move could be triggered.

Xaif Crypto stated that a move into the upper zone might trigger liquidations and a fast parabolic squeeze. Volatility is growing because price action usually becomes highly sensitive to shifts in momentum as traders try to move the market toward one of the order books.

XRP trading at $1.39 on the 1D chart | Source: XRPUSDT on Tradingview.com

Featured image from Adobe Stock, chart from Tradingview.com