Data Shows Most XRP Investors Are ‘Deeply In The Red’ – Why The Worst May Be Yet To Come

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The world’s fourth-most valuable cryptocurrency, XRP, has been stuck in the doldrums for the past two years. While a majority of the other major cryptocurrencies have been able to recoup a majority of their losses, the Ripple-promoted token is still down more than 94 percent from its all-time high of $3.40.

As a result of this lackluster performance, a large portion of the XRP investors are currently not profiting from their XRP positions. Unfortunately, this situation could get even worse as a respected analyst expects the XRP token to take a heavy beating in the near future.

XRP’s Aggregate Cost Basis Suggests Majority Of XRP Investors Are Unprofitable

While the most common measure of a cryptocurrency’s value is market capitalization, some observers argue that realized capitalization is a more accurate measure.

According to Ryan Watkins, a research analyst at crypto market data firm Messari, realized capitalization is basically an estimate of the aggregate cost basis of a cryptocurrency and is derived from the valuation of each unit of supply at the price it last moved on-chain.

Watkins notes that XRP’s realized capitalization stands at $43 billion. This means that the average XRP investor purchased the crypto while it was priced at $1.38. Simply put, a majority of XRP investors are now unprofitable at the current price of $0.19. Watkins postulated:

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“While not a lot of Bitcoin traded near Bitcoin’s all-time high, the same can’t be said for XRP. Despite XRP having only closed above $1.00 on just 2.1% of its trading days, XRP’s aggregate estimated cost basis is $1.38. This suggests most XRP investors are deeply in the red.”

Analyst Expects More Blood

Another metric that provides a bird’s-eye view of the current state of XRP is the circulating supply inflation rate. Late last month, another analyst at Messari, Florent Moulin, revealed that XRP has an inflation rate of 20% which is the highest among other large cryptocurrencies for the past five years. This annual rate is notably 5% higher than that of BTC before the halving

Moulin also compared how much of the token’s max supply has already been distributed, noting that XRP has only 30% of its maximum supply in circulation while BTC has as much as 87.5% of its max supply already in circulation. The analyst alluded that this high inflation rate is possibly inflicting downward pressure on the XRP price.

Along the same lines, 45-year trading veteran Peter Brandt recently noted that a significant downtrend in the XRP price is imminent in the days and weeks ahead. He specifically stated that XRP had fallen below a key support level that had held for a long time. If this support is not reclaimed, Brandt expects the cryptocurrency to take a deeper dive.

While the metrics cited by the aforementioned analysts are not perfect, they provide investors with a general idea of why XRP has been a total laggard and where its holders currently stand in terms of profits on their investments. With Brandt seeing more weakness coming, XRP holders could be in for more losses. 


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The views expressed in the article are wholly those of the author and do not represent those of, nor should they be attributed to, ZyCrypto. This article is not meant to give financial advice. Please carry out your own research before investing in any of the various cryptocurrencies available.