The concept of the realized cap has become fundamental to understanding XRP’s recent price movements. The realized maximum reflects the total value of XRP based on the last move of each currency, and represents a vital measure of actual investments. In February, the realized total value of XRP rose significantly, nearly doubling from $30.1 billion to $64.2 billion.
As shown, the number of short-term investors increased their share rapidly, rising from 23% to 62.8% of the total value realized in just a few months. This shift towards more short-term investors raises concerns about XRP’s exposure to greater price volatility.
Dynamics of retail investment in cryptocurrencies
The rapid rise in the number of retail investors is observed at XRP, with short-term investors now making up 62.8% of the total realized value of the asset. This rise highlights a large influx of retail capital during periods of price hikes, specifically in February. Investors have been keen to capitalize on this momentum, often buying at higher prices.
As holders of short-term stocks (STHs) are more vulnerable to price fluctuations, their increased presence is likely to put significant pressure on XRP price dynamics. For example, in recent weeks, the newly acquired XRP ratio has risen, making the market more reactive and vulnerable to decline if profits start to fall.
The P/L ratio is crucial in measuring overall market confidence, as realized profits are compared to losses. Currently, XRP’s P/L ratio has dropped significantly to a 90-day average of 46.1, indicating widespread losses for investors. This decline is consistent with the increasing dominance of short-term shareholders, exacerbating overall market vulnerability.
With the majority of investors incurring losses, the risk of panic sell-off increases significantly, raising concerns about XRP’s stability in a volatile market environment.
Mark Ueda clarifies SEC position on Bitcoin and Ethereum
In a recent interview on CNBC, Mark Oeda, acting chairman of the U.S. Securities and Exchange Commission (SEC), confirmed that Bitcoin and Ethereum are not classified as securities, agreeing with former President Gary Gensler’s position.
“My predecessor, President Gensler, has made it clear that Ethereum and Bitcoin are not securities. If it comes to either, it won’t be insider trading because it doesn’t involve buying securities.”
Despite this clarification, Ueda declined to comment on the legal status of XRP when asked by anchor Andrew Ross Sorkin. This omission makes the XRP classification ambiguous, particularly in light of recent legal developments related to Ripple Labs, the company associated with XRP.
Legal action taken by the US Securities and Exchange Commission (SEC) against Ripple Labs
The U.S. Securities and Exchange Commission (SEC) sued Ripple Labs in December 2020, alleging that the company conducted an unregistered offering of securities through the sale of XRP tokens.
In July 2023, U.S. District Judge Annalisa Torres ruled that XRP sold on public exchanges did not meet the legal definition of securities. However, it also determined that Ripple’s $728 million sales to institutional investors should have complied with securities laws, resulting in a proposed fine of $125 million.
In March 2025, Ripple CEO Brad Garlinghouse announced that the SEC would withdraw its appeal against the company.
Political scrutiny and power claims
The decision of the US Securities and Exchange Commission (SEC) to withdraw its appeal has attracted political attention. According to a recent report published by the Times Tablew, US Senator Elizabeth Warren sent a letter to the Office of the Inspector General of the US Securities and Exchange Commission on April 2, 2025, requesting an investigation into the possible undue influence of the commission’s recent decisions regarding the application of cryptocurrency laws.
XRP Market Volatility and Regulatory Challenges
Since a large part of the XRP supply is in STHs, the potential for sudden market shifts looms. If prices see minor declines, it could lead to an immediate sell-off driven by fear by investors who are quick to take swift action due to tight profit margins.
In addition, the low P/L ratio highlights the fragile nature of the current market situation. Investors may already incur losses that lead to further volatility, especially in light of external challenges such as regulatory setbacks or market-wide recessions. In such circumstances, XRP may become more vulnerable to sharp price corrections, given the absence of long-term stable support from bearers.
The letter specifically refers to Ripple Labs several times and raises questions about the timing of the Authority’s rejection of its claim against the company. Senator Warren’s investigation seeks to determine whether political pressure or conflicts of interest affected the commission’s actions.
Implications for Ripple’s regulatory position
While the U.S. Securities and Exchange Commission has halted its legal prosecution of Ripple, it has not officially announced the regulatory status of Ripple. The absence of a definitive statement from Acting President Ueda during the CNBC interview, coupled with the conclusion of legal proceedings, leaves Ripple’s rating in a state of uncertainty. This rally was mainly driven by a wave of retail investments, showing not only interest, but also speculative frenzy around XRP.
Market participants and legal experts may need to wait for further guidance from the SEC or future legislative actions to gain clarity on XRP’s place within the regulatory framework.
