XRP has experienced its largest on-chain realized loss spike since 2022, according to Santiment’s February 21 update. Realized losses occur when investors sell their coins at prices lower than their purchase cost, often during periods of panic or fear.
The previous notable spike of -$1.93 billion took place 39 months ago, after which XRP surged more than 114% over the next eight months.
Although large losses are undesirable, they can indicate that weak market participants are exiting the market. This can reduce the selling pressure in the short term.
History has shown that extreme fear is common near market bottoms, which means that a market recovery may occur once the sellers exhaust their supplies.
Chart Signals Accumulation At Key Support
Analyst BitGuru pointed out that the token is close to a strong support level on a higher timeframe chart after a long downtrend.
Looking at the Binance XRP/USDT chart, it can be seen that after a sideway movement in August and September, the price moved down significantly in October, which indicated a bearish market sentiment.
The sideway movement in November and December indicated distribution, not accumulation. However, by January and early February, the momentum in XRP began to slow down and test the crucial support zone of $1.22-$1.28.
This region has witnessed considerable buying activity, with prices strongly reacting and forming long lower wicks, indicating that the bears may be tiring out. Since then, XRP has held above this region, indicating that a short-term base may be forming.
XRP Shows Tentative Bounce From $1.22 Support
Recent market actions indicate a tentative bounce from the support level of $1.22. The rounded pattern in the chart indicates that a reversal may be feasible in the short term.
However, this can only be confirmed if XRP breaks above the current lower high level and reclaims the resistance range of $1.42-$1.50. A break above these levels may initiate a reversal towards the previous supply levels of $1.90-$2.20. Until then, the prevailing market trend remains negative.
If XRP fails to sustain the current support level of $1.22, it may continue to decline. Market participants are paying close attention to realized profit and loss and critical levels on charts.
Read More: XRP Crashes Below Realized Price As Bears Take Control
