Over the past several months, XRP has staged one of its most impressive rallies in years. Since November, the token has surged over 600%, pushing its market capitalization to nearly $190 billion. This meteoric rise has been fueled by optimism surrounding Ripple’s lawsuit settlement, growing regulatory clarity in the U.S., and increasing momentum behind ETF products tied to the cryptocurrency sector.
Yet, with such a rapid appreciation in price, the question on many investors’ minds is: Are XRP’s fundamentals strong enough to justify its valuation?
Valuation vs. Network Fundamentals: A Stark Discrepancy
As of Monday, data from DefiLlama shows that the XRP Ledger (XRPL) holds just $87.74 million in total value locked (TVL).
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24-hour DEX trading volume: $49,621
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Total application fees (24h): $1,467
This means XRP’s market cap is over 2,200 times larger than its DeFi TVL and roughly 363,000 times greater than its annualized fee revenue.
From a pure on-chain usage perspective, this is a striking gap. For XRP bulls, however, these numbers aren’t a red flag—they’re a bet on the future. Supporters believe the XRPL will see massive growth in payment volumes, stablecoin adoption, treasury allocations, and ETF-driven capital inflows, all of which could eventually justify current prices.
Rapid Growth in Tokenized Real-World Assets
One area where XRPL has shown strong momentum is in real-world asset (RWA) tokenization.
According to RWA.xyz, XRPL currently hosts $175.9 million in tokenized assets, a 52.25% increase over the past month. The breakdown includes:
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U.S. Treasuries: $120.6M
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Public equities: $55.4M
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Real estate: $4.3M
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Stablecoins: $67.3M
This growth rate ranks among the fastest in the RWA sector, indicating that XRPL may be carving out a niche in tokenizing traditional financial assets—an area with huge potential upside if adoption accelerates.
Comparing XRP to Ethereum: A Reality Check
While XRP’s valuation is high, it still lags behind Ethereum in absolute market size.
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Ethereum Market Cap: $516B
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Ethereum TVL: $92.06B
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Daily Fees: $10.48M
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Ethereum RWA Projects: $7B
Ethereum’s market cap/TVL ratio sits at 5.6, and its market cap/annual fees ratio is 135—far below XRPL’s extreme multiples.
Despite this, XRP is currently trading at nearly 40% of Ethereum’s market cap, which has led some analysts to label it “overvalued” compared to other layer-1 blockchains.
Technical Signals Point to Potential Pullback
From a technical perspective, XRP’s chart shows bearish divergence between price and the Relative Strength Index (RSI), indicating weakening buying pressure despite higher highs in price.
If history repeats itself, XRP may face a pullback toward the 20-period exponential moving average on the biweekly chart (EMA 20-2W), currently near $2.32. This would represent a 25%+ drop from current levels and aligns with XRP’s realized price over the past six months—the average price at which current holders acquired their tokens.
This same pattern of divergence preceded a significant correction during the 2017–2018 cycle.
Long-Term Outlook
While short-term technicals suggest a possible retracement, some analysts remain highly bullish, projecting XRP could reach $10 in the coming months if adoption, ETF inflows, and XRPL’s RWA expansion continue to accelerate.
For now, the debate remains sharply divided:
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Bulls see current prices as the beginning of a long-term growth cycle.
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Bears warn that fundamentals still lag too far behind market value to sustain this rally.
Whether XRP is truly overvalued or simply in the early stages of a massive adoption curve will depend on how quickly on-chain usage catches up to market expectations.
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