1 New Reason to Be Cautious About Buying Ethereum, Solana, and XRP Right Now

ETH-USD +2.33% SOL-USD +1.58% XRP-USD +0.05%

Key Points

• Capital inflows related to real-world asset tokenization have leveled off considerably over the last month.

• Ethereum is getting hit the hardest.

• Solana and XRP are actually benefiting, at least for now.

• 10 stocks we like better than Ethereum ›

Tokenized real-world assets (RWAs) on blockchains are likely to be one of the crypto sector's biggest growth drivers over the next five years or so. As more of those assets are managed or traded on blockchains, more value touches the networks in question, which supports the prices of their native tokens.

But recently, the giant bucket of real-world assets that use blockchains mostly as a glorified record-keeping system has started to shrink, even as the smaller bucket of assets that actually live and move on-chain is now barely inching forward after a big growth spurt over the last 12 months. The implications of this shift are significant for the chains most exposed to the RWA segment, specifically Ethereum (CRYPTO: ETH), Solana (CRYPTO: SOL), and XRP (CRYPTO: XRP).

It's worth being a bit more cautious about buying them than before. Here's what you need to know.

Tokenization can be just fancy bookkeeping

Tokenization is the process of representing ownership of an asset as a crypto token on a blockchain, so that transfers and updates can be handled by the chain's rules instead of a pile of spreadsheets and databases. As an example, think of a tokenized U.S. Treasury bill or an exchange-traded fund (ETF) share. The token on the blockchain stands in for the physical piece of paper you could get from the bank or your broker if you asked for it, but the economic rights conferred by controlling the asset are the same whether they're represented as a physical item or as a digital entity.

In practice, there are two very different flavors of tokenized RWAs, and, as the entire field is still emerging, the nomenclature to describe them isn't entirely standardized just yet. With "distributed" assets, the token itself is meant to move around blockchain networks, plug into smart contracts, and be held directly in crypto wallets or decentralized finance (DeFi) applications. With a distributed tokenized real-world asset, you could potentially do something like sell your car by transferring the token representing its ownership to someone else in exchange for cryptocurrency.

The other type is "represented" assets, which are tokenized assets where the blockchain is mostly used as a record-keeping system under the hood rather than as a way of moving the asset's value around. With represented assets, the assets themselves are still locked in a traditional custody stack that needs to be activated to actually transfer them or modify who owns them.

The problem is that the sum of represented RWA value across all networks is about $390.9 billion, down by roughly 2% in the last 30 days. Distributed RWA value is far smaller, at around $17.8 billion, and is also down by about 1% over the same span. For a segment that was one of 2025's favorite narratives, watching hundreds of billions of dollars in value parked in RWAs edge lower isn't great.

Is it time to be cautious?

Ethereum is still the biggest home for tokenized assets by value, with distributed RWAs totaling $11.4 billion, down 8.3% from 30 days ago, and with another $272.8 million counted as represented RWAs, excluding its vast pool of stablecoins. While its RWA holder count climbed 13.7% in the same period, the sharp decline in distributed value is problematic because it means value is leaving the chain.

Solana, in contrast, has about $807.8 million in RWA value and it is all in the distributed category, with no represented value at all. What's more, Solana's RWA pool grew by 14.4% in the last 30 days, so even as there's general weakness in the strength of inflows across the crypto sector, the network seems to be bucking the trend and continuing to grow its base of tokenized capital, which is a positive sign.

On the XRP Ledger (XRPL), there are about $394.6 million of RWAs, with roughly 34% distributed and 66% represented. And both of those categories are still growing, with on-chain distributed asset value climbing by 6.1% and represented value rising by 7.6%.

So it looks like Ethereum is the most likely to experience capital outflows due to the crypto sector's RWA growth leveling off. That means investors should probably be the most cautious about buying it if this trend continues or intensifies. And, if sector-level RWA outflows really start to pick up, be aware that neither Solana nor XRP will escape unscathed.

Even with the current outflows, investors should treat RWAs as one source of upside out of many others in play for these three coins. The cooling in RWAs is just a nudge to be more disciplined in evaluating trends affecting assets you're thinking of buying, so be sure to pay close attention before taking the plunge.

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Alex Carchidi has positions in Ethereum and Solana. The Motley Fool has positions in and recommends Ethereum, Solana, and XRP. The Motley Fool has a disclosure policy.

1 New Reason to Be Cautious About Buying Ethereum, Solana, and XRP Right Now was originally published by The Motley Fool