Introduction
The XRP Ledger has experienced a startling collapse in publicly visible activity, with key metrics like active users and payment volume falling between 50% and 80% in a matter of weeks. This dramatic decline, tracked by market watcher Arthur, has ignited a critical debate: is the network fundamentally weakening, or is this a sign of institutional activity migrating to newly activated private channels? The controversy unfolds against a backdrop of significant price pressure for XRP, which has fallen more than 60% from its 2025 peak, raising urgent questions about the asset’s underlying demand and future trajectory.
Key Points
- XLS-81 activation created private trading channels for institutions, making their activity invisible to public analytics platforms
- Over 31 million XRP moved to Binance in one day, representing approximately $45 million in potential sell pressure
- Santiment data shows XRP's largest realized loss spike since 2022, a pattern that historically preceded 114% price increases within eight months
The Dramatic Drop in Public Metrics
According to data presented by analyst Arthur on February 23, the public-facing health of the XRP Ledger (XRPL) has deteriorated sharply. The most striking figure is the plunge in active users with tags, which fell from over 200,000 to approximately 38,000. Payment volume on the public ledger saw an even more severe contraction, dropping to roughly 80 million XRP from a previous level exceeding 2.5 billion. Furthermore, the number of unique sending accounts collapsed from above 40,000 to about 3,000. Arthur himself described these public figures as “bad,” acknowledging the alarming visual narrative they create for network observers and retail investors relying on standard analytics dashboards.
This steep decline in public metrics coincides with a period of pronounced price weakness for XRP. At the time of Arthur’s analysis, the asset was trading near $1.39, reflecting a 27% drop over the past month and a staggering 46% decline across the previous year. More critically, XRP’s value stands more than 60% below its July 2025 peak of $3.65. This price context amplifies concerns that the drop in on-chain activity could signal evaporating demand, creating a negative feedback loop for investor sentiment.
XLS-81: The Institutional Explanation
Arthur and other analysts provide a pivotal counter-narrative to the bleak public data, pointing directly to a recent technical upgrade. The sharp decline began shortly after the February 18 activation of XLS-81, a new protocol feature for the XRP Ledger. XLS-81 establishes a permissioned decentralized exchange (DEX) system designed specifically for regulated financial entities. This system allows institutions to trade within restricted, private liquidity pools.
The crucial implication, as Arthur explained, is that transactions routed through these private channels are completely invisible to public blockchain trackers like XRPL Stats. Therefore, the dramatic fall in public metrics may not indicate a collapse in total network demand but rather a significant migration of volume from public view to private institutional rails. Arthur suggested that the late-2025 spike in visible activity was likely driven by retail flows, whereas current institutional flows have simply gone dark, shifting the ledger’s economic activity away from transparent analytics.
Market Pressure and Mixed Valuation Signals
Beyond ledger activity, XRP faces tangible selling pressure in the spot market. Pseudonymous analyst Darkfost reported that over 31 million XRP was transferred into wallets on the Binance exchange in a single day, primarily from large holders. They estimated these movements could represent approximately $45 million in potential sell pressure if the funds are liquidated. Darkfost also noted that Bitcoin has been trading sideways recently, a condition that typically limits directional momentum for altcoins like XRP, compounding its challenges.
Longer-term data from analytics firm Santiment offers a nuanced picture. The firm reported that XRP recently recorded its largest spike in realized losses since 2022, following its drop from around $3.60 to near $1.10. Historically, Santiment noted, similar extreme loss spikes for XRP preceded a 114% price increase within eight months, though the firm carefully avoided predicting a repeat of that pattern. In a separate valuation analysis, Santiment’s MVRV ratio—which measures whether holders are in profit or loss relative to their acquisition cost—ranked XRP as undervalued at -4.1%. However, it was less undervalued than major peers; Ethereum led at -14.3%, followed by Bitcoin at -6.9%.
The Clash Between Data and Speculation
The current environment highlights a stark contrast between on-chain data and social media speculation. Arthur explicitly criticized viral price forecasts, such as a February 22 post from trader CryptoBull2020 predicting XRP could reach $15 by March and $70 by May. He argued that tangible factors like market liquidity and macroeconomic conditions are far more consequential for price action than optimistic social media narratives. This call for data-driven analysis underscores the central dilemma: investors must now discern the true state of the XRP Ledger between misleading public stats and unverifiable private activity.
The core question remains unresolved. The precipitous drop in public XRPL metrics is an undeniable fact, presenting a worrying superficial picture of network health. Yet, the logical connection to the XLS-81 upgrade provides a plausible, bullish explanation that activity has not vanished but transformed. Until mechanisms emerge to quantify off-ledger institutional flows, the market is left to weigh circumstantial evidence against hard price action. The coming months will reveal whether this is a strategic shift toward institutional adoption or a symptom of broader weakening demand for the XRP ecosystem.
📎 Related coverage from: cryptopotato.com
