XRP has just logged its largest weekly realized loss spike since 2022, a sign that panic selling may have reached an extreme.

On-chain data shows roughly $1.93 billion in realized losses in a single week, meaning coins moved at prices below their original purchase levels. The last time losses of that magnitude were recorded, about 39 months ago, XRP went on to rally 114% over the following eight months.

Realized losses measure actual losses, not paper drawdowns. They spike when holders capitulate, choosing to lock in losses rather than wait for a rebound. Unlike unrealized losses, which can vanish if price recovers, realized losses represent final decisions.

That absorption piece matters.

For realized losses to surge into the billions, there must be aggressive selling pressure, but there must also be buyers willing to take the other side. Large capitulation events often coincide with liquidity stepping in at lower levels. Historically, these moments tend to cluster near market bottoms because much of the weaker positioning gets cleared out in one move.

When weak hands are flushed, the composition of holders shifts. The coins that change hands during capitulation typically move from short-term, emotionally driven traders to longer-term buyers with stronger conviction or better cost bases. That redistribution can create a more stable foundation for price.

However, context is key. The 2022 spike came after a prolonged drawdown and broader crypto deleveraging. Today’s environment includes macro uncertainty, shifting regulatory narratives and still-elevated volatility across majors. A realized loss spike increases the probability that sellers are exhausted, but it does not eliminate macro headwinds.

Another variable to watch is follow-through. In prior cycles, sustained recoveries required not just a single capitulation print but stabilization in spot demand and declining sell pressure in the weeks that followed. If realized losses remain elevated or quickly re-accelerate, that would suggest distribution is not finished.

For now, the data points to emotional extremes. Historically, that has been fertile ground for rebounds. Whether it becomes a durable trend shift depends on what happens after the panic subsides.