These 2 Bearish Signs Could Spell Trouble for XRP

The key issue isn’t XRP demand per se; it’s whether XRPL is becoming a productive balance-sheet venue or just a passive parking lot. A sharp drop in tokenized-asset circulation alongside only modest growth in asset counts usually means the network is attracting curiosity faster than it is attracting recurring economic activity. That distinction matters because institutional tokenization narratives are ultimately judged on velocity and fee generation, not headline TVL.

The second-order risk is competitive reflexivity. If one chain starts to show lower transfer intensity, allocators and issuers will route fresh issuance to venues where assets can be re-used, financed, or rehypothecated more efficiently, which can create a winner-take-most loop in tokenized RWA infrastructure. That dynamic is especially important over the next 1-3 quarters: once asset managers decide a chain is not producing enough turnover, liquidity tends to migrate before the market notices in TVL data.

There is still a plausible reversal path, but it requires a catalyst beyond market beta. Stablecoin throughput rising while RWA transfer volume falls suggests capital is still present, so the bearish signal is more about product mix than outright network abandonment. A meaningful rebound would likely need a marquee issuance, a major custodian/issuer onboarding, or a sustained improvement in transaction frequency rather than just more wallets.

Consensus may be underestimating how fragile the institutional tokenization thesis is to velocity compression. If the same assets stay on-chain but stop moving, the network can look superficially healthy while its economic value creation quietly deteriorates. That makes the next quarterly trend check more important than the current snapshot; if transfer volume stays negative into the next print, the market is likely to re-rate XRP from ‘tokenization proxy’ toward ‘speculative crypto beta.’