Over 40% of XRP Supply Is Underwater While Bitcoin’s New Buyers Bleed: Fragile Market, or Reset in Disguise?

Two different networks, one uncomfortable pattern: a growing share of capital is sitting in the red.

Fresh on-chain data show that the percentage of XRP supply held at a profit has dropped to about 58.5%, meaning some 41.5% of circulating tokens are currently below their last on-chain acquisition price. In value terms, that translates to more than 26 billion XRP — roughly 25 to 27 billion dollars depending on the spot rate — trapped in underwater positions. It is the weakest profitability profile for XRP holders since November 2024, when the token traded around $0.53.

At the same time, Bitcoin’s short-term holder cohort is suffering an even sharper squeeze. Almost all of the BTC acquired in the last 155 days now sits at a loss, with analytics firms estimating around 2.8 million BTC held below cost by recent buyers. In proportional terms, that means well over 90% — in some snapshots 95–99% — of short-term supply is underwater.

These numbers make for dramatic headlines, but their real value lies in what they reveal about where risk is concentrated and how sensitive different parts of the market are to further downside. In this analysis, we unpack the mechanics behind the metrics, build a picture of XRP’s “bagholder stack,” and explain why Bitcoin’s short-term pain and XRP’s structural fragility are two sides of the same late-cycle coin.

1. What “41.5% of XRP supply in loss” actually means

On-chain profitability metrics sound simple, but they encode several important nuances.

The key concept is “supply in profit” vs “supply in loss”. For each unit of XRP in circulation, analytics platforms such as Glassnode record the last time that coin moved on-chain and the price at that moment. If today’s price is higher than that historical price, the coin is classified as “in profit”; if lower, it is “in loss.” Aggregating across all coins yields the share of supply in profit (currently about 58.5%) and, by complement, the share in loss (41.5%).

There are three important implications:

• It’s about coins, not individuals. The metric tracks units of XRP, not “number of investors.” A single fund or exchange wallet can hold billions of tokens; a retail user might hold a few hundred. A 41.5% loss share does not mean 41.5% of humans are in the red, but that 41.5% of supply is.
• It is mark-to-market and dynamic. As price moves, coins flip between profit and loss buckets even if their owners do nothing. A single volatile week can change the profile dramatically.
• It is path-dependent. Where those loss-making coins were originally bought matters. Losses near the top of a parabolic move behave very differently from losses accumulated over years of sideways action.

In XRP’s case, that last point is crucial. The fact that 41.5% of supply is in loss despite price trading roughly four times higher than the $0.53 region seen in late 2024 tells us that a large wave of buying took place at much higher levels, primarily above the $2 mark. Those late entrants now form a sensitive overhang above spot.

2. Anatomy of an XRP bagholder stack

To understand why today’s profitability profile is so concerning, it helps to rewind the tape.

In late 2024, XRP finally broke free from a long base in the $0.50–$0.60 range, helped by partial legal clarity in the ongoing SEC battle and renewed institutional interest in cross-border settlement narratives. As price accelerated toward and beyond $2 into early 2025, on-chain data show that the share of supply in profit soared above 90%. Almost everyone who had accumulated during years of stagnation suddenly found themselves deeply in the green.

That is not what the metric looks like today. With XRP now trading near the low-to-mid $2 range after a sharp pullback from local highs, only 58.5% of supply is still in profit. Two things must have happened to get us here:

• Large tranches of older coins were sold into strength. Long-standing holders, including some early believers and opportunistic funds, took profits into the breakout, handing their coins to newer buyers at higher prices. This is typical late-stage bull-market behaviour.
• A substantial amount of new capital entered close to the top. The fact that 41.5% of supply is now below cost, even though current price remains much higher than in 2024, implies heavy buying between roughly $2 and recent peaks. Those coins are now clustered around loss-making entry levels, forming what traders call an “overhead supply wall.”

On-chain estimates suggest that more than 26 billion XRP tokens — worth around 26.5 billion USD at recent prices — are trapped in loss-making positions. This isn’t just a psychological curiosity. It is a structural vulnerability: every move lower increases the pressure on those underwater holders, while every rally closer to their breakeven creates an incentive to sell into strength.

3. A fragile structure: tight string, heavy load

The combination of a low profit share and a large loss overhang gives the XRP market a distinctly fragile feel.

First, liquidity is skewed. When a big portion of supply is held at a loss near current price, the order book tends to thin out on the way down and thicken on the way up. Below spot, many holders are either unable or unwilling to sell at steeper losses, which can reduce resting bids and force price to gap down through pockets of weak liquidity when market orders hit. Above spot, large volumes of limit sell orders congregate near breakeven zones, turning every bounce into a negotiation between trapped holders and fresh buyers.

Second, volatility becomes more reflexive. Imagine price slips from $2.15 to $1.90. That move doesn’t just reduce mark-to-market wealth; it also pushes additional coins from marginal profit into loss, expanding the underwater cohort. Some percentage of those new losers will respond by cutting exposure, adding to sell pressure and reinforcing the move. The process can reverse on the way up, but reflexivity is a double-edged sword.

Third, sentiment is brittle. When more than two-fifths of supply is underwater, community discourse tends to polarise. Long-term believers focus on fundamentals — payment corridors, ETF launches, fee-burning models, and institutional partnerships. Late entrants, especially those who bought near local highs, fixate on price and timeframe. The result is a market where a single negative catalyst can trigger oversized reactions, because trust in the long-term story is unevenly distributed.

None of this guarantees an imminent collapse. Markets can and do climb walls of worry. But it does mean the current structure resembles a tightly stretched string: seemingly stable, but susceptible to sharp moves if jolted.

4. Bitcoin’s mirror image: short-term holders drowning, long-term base intact

While XRP’s stress is distributed across the entire supply, Bitcoin’s latest pain is concentrated in one specific cohort: short-term holders (STH), typically defined as entities whose coins have moved in the last 155 days.

Recent analyses based on Glassnode data indicate that around 2.8 million BTC held by STHs are now below cost, the largest underwater position for this group since Bitcoin’s crash during the FTX collapse in November 2022. In proportional terms, when BTC was trading around the mid-90,000s, roughly 95% — and in some snapshots close to 99% — of all coins acquired within the last 155 days were at a loss.

It’s crucial to highlight what this does and does not mean:

• It does not mean 90% of all Bitcoin investors are losing money. Long-term holders who accumulated in earlier cycles often have cost bases orders of magnitude lower than current price and remain comfortably in profit.
• It does mean that the incremental demand that drove Bitcoin to its recent all-time highs — the buyers who stepped in over roughly the last five months — is almost entirely under water.

This configuration creates its own kind of fragility:

• STH capitulation risk. When nearly all recent buyers are sitting on red PnL, any further drawdown can trigger capitulation, especially among levered traders or funds with strict risk limits. That capitulation often shows up as spikes in coins sent to exchanges at a loss, forced liquidations in derivatives, and compressed funding rates.
• Overhead resistance near STH cost basis. Just as with XRP, rallies back toward the short-term holder cost basis (recently in the $100k+ region) encounter supply from investors eager to exit at break-even. That can make reclaiming prior highs a grinding process.
• Asymmetric long-term positioning. Unlike XRP, however, Bitcoin’s long-term holder base still controls the majority of supply and, on aggregate, remains in profit. Many of these coins are in deep cold storage or ETF wrappers and are less likely to react to short-term volatility. That structural illiquidity can amplify both sell-offs and recoveries.

In simple terms: XRP has a mixed holder base where both long-standing and late-cycle capital are showing strain, while Bitcoin has a split personality — older hands still in strong shape, newer entrants in obvious distress.

5. XRP vs Bitcoin: two stress tests, one late-cycle signal

Putting these pieces together, what do we learn about the broader market?

First, risk is no longer evenly distributed. For much of the early 2025 rally, it was easy to tell a simple story: macro was easing, liquidity was returning, and everything from Layer 1s to payment tokens rose more or less together. Today’s on-chain data show a more granular reality. Some assets, like XRP, are carrying a heavy load of high-price entrants. Others, like Bitcoin, are experiencing acute stress among recent buyers while the deep base remains relatively calm.

Second, leverage has shifted from explicit to implicit. Derivatives metrics certainly matter — highly leveraged positions can still be liquidated in brutal fashion — but the more subtle leverage is psychological and behavioural. Holders who bought XRP above $2.50 or Bitcoin above $115k using no formal margin may still have borrowed against their portfolios, made lifestyle decisions based on unrealized gains, or simply anchored their expectations to recent peaks. When price falls, that hidden leverage shows up in forced selling and rapid sentiment swings.

Third, both assets are now in what might be called “honesty zones.” Prior highs and optimistic narratives have already been tested and found wanting, at least temporarily. ETF launches, legal milestones and macro tailwinds have all been absorbed into price. What remains is a simple question: is there enough organic demand, at today’s valuations, to persuade underwater holders to keep holding rather than hitting the sell button?

For XRP, that question is especially stark. The token is trying to transition from a speculative vehicle into the backbone of ETF products, remittance corridors and DeFi experiments on the XRP Ledger. But if the majority of new capital in 2025 bought in near local peaks, the network now has to prove its fundamental value in an environment where many participants are nursing heavy paper losses.

6. Scenarios for XRP from here

Given the current profitability profile, three broad paths stand out for XRP in the months ahead:

6.1. Capitulation flush

In a bearish scenario, macro conditions worsen and liquidity thins further across the crypto complex. XRP loses key support levels, pushing even more supply into loss. At some point, a subset of underwater holders capitulates, selling at market and driving price sharply lower. While painful, such events can reset the holder base by transferring coins from emotionally exhausted participants to more patient buyers. Historically, extremes in supply-in-loss metrics have sometimes coincided with medium-term bottoms.

6.2. Slow bleed and structural drift

A less dramatic, but still problematic, outcome is a prolonged range or slow grind lower. Price oscillates between, say, $1.50 and $2.30, never low enough to trigger full capitulation, but rarely high enough for trapped buyers to exit with satisfaction. In this regime, time becomes the main enemy: opportunity cost mounts, narratives grow stale and capital gradually rotates into sectors with clearer upside, such as infrastructure or different L1s. The share of supply in profit could slowly improve, but mostly via duration rather than decisive price moves.

6.3. Reacceleration and short squeeze

In a more optimistic scenario, a combination of macro relief (e.g., clearer rate path), renewed ETF inflows or a tangible breakthrough in XRP Ledger adoption sparks fresh demand. Price climbs back through key resistance clusters, forcing shorts to cover and encouraging sidelined capital to re-enter. Underwater holders face a choice: sell at break-even or hold for a new leg higher. If enough choose the latter, the supply wall can be climbed rather than slammed into.

None of these paths is pre-ordained. The current data simply tell us that, whatever happens, the journey will involve navigating a large cohort of investors who are not where they hoped to be when they clicked “buy.”

7. How serious investors should use these metrics

For a professional audience, the value of on-chain profitability metrics is not in memes about “bagholders” but in risk mapping.

• Positioning context. Knowing that 41.5% of XRP supply and over 90% of Bitcoin short-term supply are underwater helps frame the likely behaviour of different cohorts. You don’t have to predict their every move; you simply know where the pressure points are.
• Entry and exit discipline. For those considering adding exposure, these metrics argue against blindly buying into shallow bounces. Support levels sitting directly under a massive loss overhang are more fragile than they look on a static chart.
• Narrative sanity checks. If social media is celebrating ETFs, partnerships or legal victories while the percentage of supply in profit is falling to multi-year lows, something doesn’t add up. Either the narrative is ahead of the data, or the data are capturing a regime shift the narrative hasn’t yet processed.

Most importantly, these indicators can help reset expectations. An asset can be fundamentally promising and still trade through periods where the majority of recent buyers are underwater. That isn’t necessarily a verdict on the technology; it is a verdict on timing and position sizing.

Conclusion: fragile, but not finished

The latest on-chain readings for XRP and Bitcoin paint a sobering picture: more than two-fifths of XRP’s circulating supply sits below cost, the weakest profitability since late 2024, while almost the entire cohort of Bitcoin’s recent buyers is in the red. It is tempting to translate those facts directly into a narrative of impending doom.

A more balanced interpretation is that the market is undergoing a necessary, if brutal, honesty check. Late-cycle optimism pushed prices, flows and expectations to levels that required perfection from macro, policy and product launches. Reality has been messier. As a result, capital is redistributing: from new hands back to older ones, from crowded narratives to more sober assessments of risk and reward.

For XRP, the challenge is to prove that what remains after this flush is more than a stack of underwater positions — that the ledger, its use cases and its emerging ETF ecosystem can justify holding through drawdowns. For Bitcoin, the task is to absorb short-term holder pain without breaking the longer-term adoption curve that brought sovereigns, corporates and institutions into the fold.

Either way, serious analysis has to start with where the coins actually are, who owns them, and at what price. On-chain profitability metrics, used carefully, offer exactly that lens. In a market flooded with narratives, they are one of the few tools that cannot be spun by a clever tweet.

This article is for informational and educational purposes only and does not constitute investment, trading, legal or tax advice. Digital assets are highly volatile and may be unsuitable for many investors. Always conduct your own research and consider consulting a qualified professional before making financial decisions.