XRP just recorded its largest spike in weekly realized losses since 2022, a sign that panic selling may have reached an extreme.
On-chain data shows approximately $1.93 billion in realized losses in a single week, meaning the coins moved at prices lower than their original purchase levels. The last time losses of this magnitude were recorded, around 39 months ago, XRP rose 114% over the following eight months.
Realized losses measure actual losses and not paper levies. They rise when holders capitulate, choosing to lock in their losses rather than wait for a rebound. Unlike unrealized losses, which can disappear if the price rises, realized losses represent final decisions.
This absorption part is important.
For realized losses to reach into the billions, there must be aggressive selling pressure, but there must also be buyers willing to take the other side. Significant capitulation events often coincide with liquidity arriving at lower levels. Historically, these times tend to cluster near the market’s lows, as much of the weaker positioning gets wiped out in one fell swoop.
When weak hands are reddened, the composition of holders changes. Coins that change hands during capitulation typically move from emotionally driven short-term traders to longer-term buyers with stronger conviction or better cost bases. This redistribution can create a more stable price base.
However, context is key. The 2022 peak came after a prolonged drawdown and broader crypto deleveraging. The current environment includes macroeconomic uncertainty, changing regulatory discourse and continued high volatility among large companies. A spike in realized losses increases the likelihood that sellers will be exhausted, but this does not eliminate macroeconomic headwinds.
Another variable to watch out for is tracking. In previous cycles, sustained rallies required not only a single sense of capitulation, but also a stabilization of spot demand and a reduction in selling pressure in the weeks that followed. If realized losses remain high or accelerate rapidly again, this would mean the distribution is not complete.
For now, the data points toward emotional extremes. Historically, this has been fertile ground for rebounds. Whether this change in trend becomes lasting will depend on what happens once the panic subsides.
