XRP Eyes Recovery After Largest On-Chain Loss Spike Since 2022

• XRP’s recent $908M losses show panic selling, but history suggests this often signals a market bottom.

• Past large loss spikes led to big rebounds—XRP could see upward momentum as weak hands exit.

• Funding rates show caution, but price rebounds to $1.50–$1.60 hint traders may slowly regain confidence.

XRP traders face heightened attention as the cryptocurrency hits its largest on-chain realized loss spike since November 2022. According to Santiment, approximately $908 million in losses recently occurred when investors sold coins below their purchase price.

As per the data, significant realized losses often coincide with panic selling, reflecting widespread fear among market participants. However, historical trends suggest that such intense sell-offs can mark potential market bottoms. When weak hands exit, fewer sellers remain, creating room for a price rebound.

There was a similar $1.93 billion loss in October 2022, preceded by a remarkable 114% price increase over eight months. Hence, the recent spike could signal the start of a recovery phase.

Moreover, price action and network data support this narrative. Following the losses, XRP’s value has rebounded toward the $1.50–$1.60 range. The overlay of realized profit and loss with price movements historically shows that large loss events precede sustained gains.

Consequently, traders might find renewed opportunities as the market digests the heavy selling. Additionally, observing the perpetual futures funding rate provides insight into trader sentiment.

Shifts in Trader Sentiment and Funding Rates

In late December to early January, as per Coinglass data, XRP was trading slightly below $2.00, with lateral movements. The first week of January saw a strong move above $2.30, with positive funding rates, signifying a bullish sentiment. But the mid-to-late January period saw a weakening of momentum, with prices dropping back to around $2.00. Funding rates were volatile, showing that the market was unsure of what to do.

The most volatile period was in early February. XRP dropped to $1.20-$1.30, with strongly negative funding rates. This showed strong bearish sentiment, with strong shorting. But a strong recovery followed, with prices rising back to $1.50-$1.60. Even then, the funding rates were negative, showing that the market was cautious.