XRP has risen over 600% since November, reaching a market cap of about $190 billion, amid the market assessing the Ripple lawsuit settlement, regulatory transparency in the U.S., and ETF growth momentum.
However, with such rapid growth, will XRP's fundamentals keep pace with its price? Let's take a closer look with Bitcoin Magazine.
XRP's valuation is over 2,200 times the TVL.
According to data from DefiLlama, as of Monday, the XRP Ledger (XRPL) network has a total value locked (TVL) of only $87.74 million.
In the past 24 hours, trading volume on XRPL's DEX was only $49,621, while application fees reached just $1,467.
Based on these metrics, XRP's market capitalization is over 2,200 times the total DeFi TVL and about 363,000 times the fee revenue.
For XRP bulls, the current valuation reflects confidence in XRPL's future growth potential: payment volume, stablecoin growth, capital allocation from enterprises, and ETF inflows are expected to surge.
From their perspective, these drivers are the reason behind the current price, even as on-chain usage remains relatively modest.
XRPL holds $175.9 million in tokenized assets, up 52.25% in a month, led by U.S. Treasury bonds ($120.6 million), public company stocks ($55.4 million), real estate ($4.3 million), and stablecoins ($67.3 million).
This growth trajectory positions XRPL among the fastest-growing in the RWA space, opening up numerous potential applications that could drive XRP demand in the future.
XRP still lags behind the top layer-1 blockchain, Ethereum.
As of Monday, Ethereum's market capitalization is over $516 billion, with a TVL of $92.06 billion and generating $10.48 million in daily application fees. It also tops the RWA rankings with $7 billion in assets under management.
This brings the market capitalization to TVL ratio of Ethereum to just 5.6 and the market cap to annual fee ratio to 135, significantly lower than XRPL.
Despite the fundamentals lagging far behind, XRP is still trading at nearly 40% of Ethereum's market cap, leading some analysts to claim that this altcoin is "overvalued."
Bearish divergence suggests a 25% correction.
Technically, XRP's recent surge shows signs of slowing down.
The clear bearish divergence between price and the relative strength index (RSI) indicates that buying pressure is weakening even as prices rise, a setup that often precedes corrections.
XRP may face an initial correction towards the 20-2W exponential moving average (EMA 20-2W; purple wave) near $2.32 in September, losing over 25% from the current price.
A similar decline occurred after bearish divergence signals in the 2017–2018 cycle.
The level of $2.32 is close to XRP's fair value over the past six months and is the average price at which current holders purchased their tokens during that period.
XRP could slide back towards the upper level if the momentum weakens, with a retest potentially shaking out weaker players before any recovery.
However, some technical analysts remain confident that XRP will soar to $10 in the coming months.